Correlation Between Kolon Plastics and Naver
Can any of the company-specific risk be diversified away by investing in both Kolon Plastics and Naver 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 Kolon Plastics and Naver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kolon Plastics and Naver, you can compare the effects of market volatilities on Kolon Plastics and Naver 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 Kolon Plastics with a short position of Naver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kolon Plastics and Naver.
Diversification Opportunities for Kolon Plastics and Naver
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kolon and Naver is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Kolon Plastics and Naver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naver and Kolon Plastics 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 Kolon Plastics are associated (or correlated) with Naver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naver has no effect on the direction of Kolon Plastics i.e., Kolon Plastics and Naver go up and down completely randomly.
Pair Corralation between Kolon Plastics and Naver
Assuming the 90 days trading horizon Kolon Plastics is expected to under-perform the Naver. But the stock apears to be less risky and, when comparing its historical volatility, Kolon Plastics is 1.36 times less risky than Naver. The stock trades about -0.13 of its potential returns per unit of risk. The Naver is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 20,850,000 in Naver on November 6, 2024 and sell it today you would earn a total of 850,000 from holding Naver or generate 4.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kolon Plastics vs. Naver
Performance |
| Timeline |
| Kolon Plastics |
| Naver |
Kolon Plastics and Naver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kolon Plastics and Naver
The main advantage of trading using opposite Kolon Plastics and Naver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kolon Plastics position performs unexpectedly, Naver 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 Naver will offset losses from the drop in Naver's long position.| Kolon Plastics vs. CU Medical Systems | Kolon Plastics vs. KB Financial Group | Kolon Plastics vs. Lotte Data Communication | Kolon Plastics vs. Hankukpackage Co |
| Naver vs. Atinum Investment Co | Naver vs. Inzi Display CoLtd | Naver vs. SV Investment | Naver vs. Pureun Mutual Savings |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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