Correlation Between CU Medical and Korean Drug
Can any of the company-specific risk be diversified away by investing in both CU Medical 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 CU Medical and Korean Drug into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CU Medical Systems and Korean Drug Co, you can compare the effects of market volatilities on CU Medical 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 CU Medical with a short position of Korean Drug. Check out your portfolio center. Please also check ongoing floating volatility patterns of CU Medical and Korean Drug.
Diversification Opportunities for CU Medical and Korean Drug
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 115480 and Korean is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding CU Medical Systems and Korean Drug Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Drug and CU Medical 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 CU Medical Systems 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 CU Medical i.e., CU Medical and Korean Drug go up and down completely randomly.
Pair Corralation between CU Medical and Korean Drug
Assuming the 90 days trading horizon CU Medical Systems is expected to under-perform the Korean Drug. In addition to that, CU Medical is 1.03 times more volatile than Korean Drug Co. It trades about -0.07 of its total potential returns per unit of risk. Korean Drug Co is currently generating about -0.04 per unit of volatility. If you would invest 639,392 in Korean Drug Co on August 27, 2024 and sell it today you would lose (192,392) from holding Korean Drug Co or give up 30.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CU Medical Systems vs. Korean Drug Co
Performance |
| Timeline |
| CU Medical Systems |
| Korean Drug |
CU Medical and Korean Drug Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CU Medical and Korean Drug
The main advantage of trading using opposite CU Medical and Korean Drug positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CU Medical 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.| CU Medical vs. Medy Tox | CU Medical vs. Busan Industrial Co | CU Medical vs. Busan Ind | CU Medical vs. Mirae Asset Daewoo |
| Korean Drug vs. Kolon Life Science | Korean Drug vs. Aminologics CoLtd | Korean Drug vs. Daihan Pharmaceutical CoLtd | Korean Drug vs. Withuspharmaceutical CoLtd |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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