Correlation Between SS TECH and Korean Drug
Can any of the company-specific risk be diversified away by investing in both SS TECH and Korean Drug 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 SS TECH and Korean Drug into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SS TECH and Korean Drug Co, you can compare the effects of market volatilities on SS TECH and Korean Drug 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 SS TECH with a short position of Korean Drug. Check out your portfolio center. Please also check ongoing floating volatility patterns of SS TECH and Korean Drug.
Diversification Opportunities for SS TECH and Korean Drug
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 101490 and Korean is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding SS TECH and Korean Drug Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Drug and SS TECH 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 SS TECH are associated (or correlated) with Korean Drug. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Drug has no effect on the direction of SS TECH i.e., SS TECH and Korean Drug go up and down completely randomly.
Pair Corralation between SS TECH and Korean Drug
Assuming the 90 days trading horizon SS TECH is expected to generate 0.85 times more return on investment than Korean Drug. However, SS TECH is 1.17 times less risky than Korean Drug. It trades about 0.26 of its potential returns per unit of risk. Korean Drug Co is currently generating about 0.21 per unit of risk. If you would invest 2,485,119 in SS TECH on October 12, 2024 and sell it today you would earn a total of 424,881 from holding SS TECH or generate 17.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SS TECH vs. Korean Drug Co
Performance |
| Timeline |
| SS TECH |
| Korean Drug |
SS TECH and Korean Drug Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SS TECH and Korean Drug
The main advantage of trading using opposite SS TECH and Korean Drug positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SS TECH position performs unexpectedly, Korean Drug 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 Korean Drug will offset losses from the drop in Korean Drug's long position.The idea behind SS TECH and Korean Drug Co 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.| Korean Drug vs. Yura Tech Co | Korean Drug vs. Lotte Non Life Insurance | Korean Drug vs. SS TECH | Korean Drug vs. Samsung Publishing Co |
Check out your portfolio center.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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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