Correlation Between Miwon Chemical and Korea Information
Can any of the company-specific risk be diversified away by investing in both Miwon Chemical 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 Miwon Chemical and Korea Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miwon Chemical and Korea Information Engineering, you can compare the effects of market volatilities on Miwon Chemical 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 Miwon Chemical with a short position of Korea Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miwon Chemical and Korea Information.
Diversification Opportunities for Miwon Chemical and Korea Information
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Miwon and Korea is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Miwon Chemical and Korea Information Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information and Miwon Chemical 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 Miwon Chemical 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 Miwon Chemical i.e., Miwon Chemical and Korea Information go up and down completely randomly.
Pair Corralation between Miwon Chemical and Korea Information
Assuming the 90 days trading horizon Miwon Chemical is expected to generate 0.47 times more return on investment than Korea Information. However, Miwon Chemical is 2.15 times less risky than Korea Information. It trades about -0.23 of its potential returns per unit of risk. Korea Information Engineering is currently generating about -0.36 per unit of risk. If you would invest 7,990,000 in Miwon Chemical on August 25, 2024 and sell it today you would lose (290,000) from holding Miwon Chemical or give up 3.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Miwon Chemical vs. Korea Information Engineering
Performance |
| Timeline |
| Miwon Chemical |
| Korea Information |
Miwon Chemical and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miwon Chemical and Korea Information
The main advantage of trading using opposite Miwon Chemical and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miwon Chemical 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.| Miwon Chemical vs. LG Chem | Miwon Chemical vs. Chunbo Co | Miwon Chemical vs. Hyosung Chemical Corp | Miwon Chemical vs. LIG ES SPAC |
| Korea Information vs. Hannong Chemicals | Korea Information vs. Daejung Chemicals Metals | Korea Information vs. Digital Power Communications | Korea Information vs. Nice Information Telecommunication |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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