Correlation Between Grand Korea and Aurora World
Can any of the company-specific risk be diversified away by investing in both Grand Korea and Aurora World 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 Grand Korea and Aurora World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand Korea Leisure and Aurora World, you can compare the effects of market volatilities on Grand Korea and Aurora World 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 Grand Korea with a short position of Aurora World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Korea and Aurora World.
Diversification Opportunities for Grand Korea and Aurora World
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grand and Aurora is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Grand Korea Leisure and Aurora World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora World and Grand Korea 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 Grand Korea Leisure are associated (or correlated) with Aurora World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora World has no effect on the direction of Grand Korea i.e., Grand Korea and Aurora World go up and down completely randomly.
Pair Corralation between Grand Korea and Aurora World
Assuming the 90 days trading horizon Grand Korea Leisure is expected to under-perform the Aurora World. In addition to that, Grand Korea is 1.35 times more volatile than Aurora World. It trades about -0.05 of its total potential returns per unit of risk. Aurora World is currently generating about -0.03 per unit of volatility. If you would invest 703,000 in Aurora World on September 12, 2024 and sell it today you would lose (98,000) from holding Aurora World or give up 13.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.69% |
| Values | Daily Returns |
Grand Korea Leisure vs. Aurora World
Performance |
| Timeline |
| Grand Korea Leisure |
| Aurora World |
Grand Korea and Aurora World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Korea and Aurora World
The main advantage of trading using opposite Grand Korea and Aurora World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Korea position performs unexpectedly, Aurora World 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 Aurora World will offset losses from the drop in Aurora World's long position.| Grand Korea vs. Handok Clean Tech | Grand Korea vs. Samsung Life Insurance | Grand Korea vs. Tae Kyung Chemical | Grand Korea vs. Asiana Airlines |
| Aurora World vs. Ssangyong Information Communication | Aurora World vs. PJ Metal Co | Aurora World vs. CG Hi Tech | Aurora World vs. Korea Computer |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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