Correlation Between Mobileleader CoLtd and KakaoBank Corp

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Can any of the company-specific risk be diversified away by investing in both Mobileleader CoLtd and KakaoBank Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Mobileleader CoLtd and KakaoBank Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mobileleader CoLtd and KakaoBank Corp, you can compare the effects of market volatilities on Mobileleader CoLtd and KakaoBank Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Mobileleader CoLtd with a short position of KakaoBank Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mobileleader CoLtd and KakaoBank Corp.

Diversification Opportunities for Mobileleader CoLtd and KakaoBank Corp

MobileleaderKakaoBankDiversified AwayMobileleaderKakaoBankDiversified Away100%
0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Mobileleader and KakaoBank is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Mobileleader CoLtd and KakaoBank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KakaoBank Corp and Mobileleader CoLtd is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Mobileleader CoLtd are associated (or correlated) with KakaoBank Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KakaoBank Corp has no effect on the direction of Mobileleader CoLtd i.e., Mobileleader CoLtd and KakaoBank Corp go up and down completely randomly.

Pair Corralation between Mobileleader CoLtd and KakaoBank Corp

Assuming the 90 days trading horizon Mobileleader CoLtd is expected to generate 5.19 times less return on investment than KakaoBank Corp. But when comparing it to its historical volatility, Mobileleader CoLtd is 1.87 times less risky than KakaoBank Corp. It trades about 0.13 of its potential returns per unit of risk. KakaoBank Corp is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  2,080,000  in KakaoBank Corp on November 19, 2024 and sell it today you would earn a total of  275,000  from holding KakaoBank Corp or generate 13.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Mobileleader CoLtd  vs.  KakaoBank Corp

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-505
JavaScript chart by amCharts 3.21.15100030 323410
       Timeline  
Mobileleader CoLtd 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Mobileleader CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mobileleader CoLtd is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb14,00014,50015,00015,50016,00016,50017,00017,500
KakaoBank Corp 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in KakaoBank Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KakaoBank Corp sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb20,00021,00022,00023,00024,00025,000

Mobileleader CoLtd and KakaoBank Corp Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.21-5.4-3.59-1.780.01.753.575.387.199.0 0.020.030.040.050.060.07
JavaScript chart by amCharts 3.21.15100030 323410
       Returns  

Pair Trading with Mobileleader CoLtd and KakaoBank Corp

The main advantage of trading using opposite Mobileleader CoLtd and KakaoBank Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mobileleader CoLtd position performs unexpectedly, KakaoBank Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in KakaoBank Corp will offset losses from the drop in KakaoBank Corp's long position.
The idea behind Mobileleader CoLtd and KakaoBank Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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