Correlation Between MS Autotech and Korea Information
Can any of the company-specific risk be diversified away by investing in both MS Autotech and Korea Information 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 MS Autotech and Korea Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MS Autotech CoLtd and Korea Information Engineering, you can compare the effects of market volatilities on MS Autotech and Korea Information 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 MS Autotech with a short position of Korea Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of MS Autotech and Korea Information.
Diversification Opportunities for MS Autotech and Korea Information
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 123040 and Korea is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding MS Autotech CoLtd and Korea Information Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information and MS Autotech 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 MS Autotech CoLtd are associated (or correlated) with Korea Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of MS Autotech i.e., MS Autotech and Korea Information go up and down completely randomly.
Pair Corralation between MS Autotech and Korea Information
Assuming the 90 days trading horizon MS Autotech CoLtd is expected to under-perform the Korea Information. But the stock apears to be less risky and, when comparing its historical volatility, MS Autotech CoLtd is 1.42 times less risky than Korea Information. The stock trades about -0.11 of its potential returns per unit of risk. The Korea Information Engineering is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 286,000 in Korea Information Engineering on September 4, 2024 and sell it today you would lose (51,500) from holding Korea Information Engineering or give up 18.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MS Autotech CoLtd vs. Korea Information Engineering
Performance |
| Timeline |
| MS Autotech CoLtd |
| Korea Information |
MS Autotech and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MS Autotech and Korea Information
The main advantage of trading using opposite MS Autotech and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MS Autotech position performs unexpectedly, Korea Information 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 Korea Information will offset losses from the drop in Korea Information's long position.| MS Autotech vs. Korea Real Estate | MS Autotech vs. Busan Industrial Co | MS Autotech vs. UNISEM Co | MS Autotech vs. RPBio Inc |
| Korea Information vs. Dongsin Engineering Construction | Korea Information vs. Doosan Fuel Cell | Korea Information vs. Daishin Balance 1 | Korea Information vs. Total Soft Bank |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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