Correlation Between Green Cross and SK Bioscience
Can any of the company-specific risk be diversified away by investing in both Green Cross and SK Bioscience 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 Green Cross and SK Bioscience into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Cross Lab and SK Bioscience Co, you can compare the effects of market volatilities on Green Cross and SK Bioscience 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 Green Cross with a short position of SK Bioscience. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Cross and SK Bioscience.
Diversification Opportunities for Green Cross and SK Bioscience
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Green and 302440 is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Green Cross Lab and SK Bioscience Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Bioscience and Green Cross 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 Green Cross Lab are associated (or correlated) with SK Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Bioscience has no effect on the direction of Green Cross i.e., Green Cross and SK Bioscience go up and down completely randomly.
Pair Corralation between Green Cross and SK Bioscience
Assuming the 90 days trading horizon Green Cross Lab is expected to generate 1.24 times more return on investment than SK Bioscience. However, Green Cross is 1.24 times more volatile than SK Bioscience Co. It trades about -0.03 of its potential returns per unit of risk. SK Bioscience Co is currently generating about -0.04 per unit of risk. If you would invest 3,839,216 in Green Cross Lab on August 28, 2024 and sell it today you would lose (1,289,216) from holding Green Cross Lab or give up 33.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Green Cross Lab vs. SK Bioscience Co
Performance |
| Timeline |
| Green Cross Lab |
| SK Bioscience |
Green Cross and SK Bioscience Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Green Cross and SK Bioscience
The main advantage of trading using opposite Green Cross and SK Bioscience positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Cross position performs unexpectedly, SK Bioscience 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 SK Bioscience will offset losses from the drop in SK Bioscience's long position.| Green Cross vs. ABOV Semiconductor Co | Green Cross vs. Orbitech Co | Green Cross vs. Seoul Semiconductor Co | Green Cross vs. Green Cross Medical |
| SK Bioscience vs. Hankukpackage Co | SK Bioscience vs. Tae Kyung Chemical | SK Bioscience vs. Formetal Co | SK Bioscience vs. Daedong Metals Co |
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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