Correlation Between Microfriend and Korea Refractories
Can any of the company-specific risk be diversified away by investing in both Microfriend and Korea Refractories 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 Korea Refractories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microfriend and Korea Refractories Co, you can compare the effects of market volatilities on Microfriend and Korea Refractories 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 Korea Refractories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microfriend and Korea Refractories.
Diversification Opportunities for Microfriend and Korea Refractories
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microfriend and Korea is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Microfriend and Korea Refractories Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Refractories 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 Korea Refractories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Refractories has no effect on the direction of Microfriend i.e., Microfriend and Korea Refractories go up and down completely randomly.
Pair Corralation between Microfriend and Korea Refractories
Assuming the 90 days trading horizon Microfriend is expected to generate 2.15 times more return on investment than Korea Refractories. However, Microfriend is 2.15 times more volatile than Korea Refractories Co. It trades about -0.03 of its potential returns per unit of risk. Korea Refractories Co is currently generating about -0.06 per unit of risk. If you would invest 513,000 in Microfriend on September 12, 2024 and sell it today you would lose (240,000) from holding Microfriend or give up 46.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microfriend vs. Korea Refractories Co
Performance |
| Timeline |
| Microfriend |
| Korea Refractories |
Microfriend and Korea Refractories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microfriend and Korea Refractories
The main advantage of trading using opposite Microfriend and Korea Refractories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microfriend position performs unexpectedly, Korea Refractories 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 Refractories will offset losses from the drop in Korea Refractories' long position.| Microfriend vs. Hansol Chemical Co | Microfriend vs. Kukdo Chemical Co | Microfriend vs. Jinro Distillers Co | Microfriend vs. InnoTherapy |
| Korea Refractories vs. Samsung Electronics Co | Korea Refractories vs. Samsung Electronics Co | Korea Refractories vs. SK Hynix | Korea Refractories vs. POSCO Holdings |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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