Correlation Between Microfriend and Tae Kwang
Can any of the company-specific risk be diversified away by investing in both Microfriend and Tae Kwang 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 Tae Kwang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microfriend and Tae Kwang, you can compare the effects of market volatilities on Microfriend and Tae Kwang 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 Tae Kwang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microfriend and Tae Kwang.
Diversification Opportunities for Microfriend and Tae Kwang
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microfriend and Tae is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Microfriend and Tae Kwang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tae Kwang 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 Tae Kwang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tae Kwang has no effect on the direction of Microfriend i.e., Microfriend and Tae Kwang go up and down completely randomly.
Pair Corralation between Microfriend and Tae Kwang
Assuming the 90 days trading horizon Microfriend is expected to under-perform the Tae Kwang. In addition to that, Microfriend is 1.35 times more volatile than Tae Kwang. It trades about -0.01 of its total potential returns per unit of risk. Tae Kwang is currently generating about 0.01 per unit of volatility. If you would invest 1,767,354 in Tae Kwang on September 1, 2024 and sell it today you would lose (55,354) from holding Tae Kwang or give up 3.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microfriend vs. Tae Kwang
Performance |
| Timeline |
| Microfriend |
| Tae Kwang |
Microfriend and Tae Kwang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microfriend and Tae Kwang
The main advantage of trading using opposite Microfriend and Tae Kwang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microfriend position performs unexpectedly, Tae Kwang 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 Tae Kwang will offset losses from the drop in Tae Kwang's long position.| Microfriend vs. SK Hynix | Microfriend vs. LX Semicon Co | Microfriend vs. Tokai Carbon Korea | Microfriend vs. People Technology |
| Tae Kwang vs. Sung Kwang Bend | Tae Kwang vs. Taewoong CoLtd | Tae Kwang vs. SFA Engineering | Tae Kwang vs. Soulbrain Holdings 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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