Correlation Between Microfriend and ISU Chemical
Can any of the company-specific risk be diversified away by investing in both Microfriend and ISU Chemical 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 Microfriend and ISU Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microfriend and ISU Chemical Co, you can compare the effects of market volatilities on Microfriend and ISU Chemical 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 Microfriend with a short position of ISU Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microfriend and ISU Chemical.
Diversification Opportunities for Microfriend and ISU Chemical
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microfriend and ISU is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Microfriend and ISU Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISU Chemical and Microfriend 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 Microfriend are associated (or correlated) with ISU Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISU Chemical has no effect on the direction of Microfriend i.e., Microfriend and ISU Chemical go up and down completely randomly.
Pair Corralation between Microfriend and ISU Chemical
Assuming the 90 days trading horizon Microfriend is expected to under-perform the ISU Chemical. In addition to that, Microfriend is 1.14 times more volatile than ISU Chemical Co. It trades about -0.03 of its total potential returns per unit of risk. ISU Chemical Co is currently generating about 0.0 per unit of volatility. If you would invest 632,000 in ISU Chemical Co on October 24, 2024 and sell it today you would lose (2,000) from holding ISU Chemical Co or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microfriend vs. ISU Chemical Co
Performance |
| Timeline |
| Microfriend |
| ISU Chemical |
Microfriend and ISU Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microfriend and ISU Chemical
The main advantage of trading using opposite Microfriend and ISU Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microfriend position performs unexpectedly, ISU Chemical 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 ISU Chemical will offset losses from the drop in ISU Chemical's long position.| Microfriend vs. YG Entertainment | Microfriend vs. Ssangyong Information Communication | Microfriend vs. Korea Shipbuilding Offshore | Microfriend vs. Barunson Entertainment Arts |
| ISU Chemical vs. FNSTech Co | ISU Chemical vs. Kbi Metal Co | ISU Chemical vs. Wonbang Tech Co | ISU Chemical vs. Hanjoo Light Metal |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Global Correlations Find global opportunities by holding instruments from different markets |