Correlation Between Cheryong Industrial and ECSTELECOM
Can any of the company-specific risk be diversified away by investing in both Cheryong Industrial and ECSTELECOM 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 Cheryong Industrial and ECSTELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheryong Industrial CoLtd and ECSTELECOM Co, you can compare the effects of market volatilities on Cheryong Industrial and ECSTELECOM 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 Cheryong Industrial with a short position of ECSTELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheryong Industrial and ECSTELECOM.
Diversification Opportunities for Cheryong Industrial and ECSTELECOM
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cheryong and ECSTELECOM is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial CoLtd and ECSTELECOM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECSTELECOM and Cheryong Industrial 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 Cheryong Industrial CoLtd are associated (or correlated) with ECSTELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECSTELECOM has no effect on the direction of Cheryong Industrial i.e., Cheryong Industrial and ECSTELECOM go up and down completely randomly.
Pair Corralation between Cheryong Industrial and ECSTELECOM
Assuming the 90 days trading horizon Cheryong Industrial CoLtd is expected to generate 2.88 times more return on investment than ECSTELECOM. However, Cheryong Industrial is 2.88 times more volatile than ECSTELECOM Co. It trades about 0.03 of its potential returns per unit of risk. ECSTELECOM Co is currently generating about -0.02 per unit of risk. If you would invest 466,310 in Cheryong Industrial CoLtd on August 31, 2024 and sell it today you would earn a total of 47,690 from holding Cheryong Industrial CoLtd or generate 10.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheryong Industrial CoLtd vs. ECSTELECOM Co
Performance |
| Timeline |
| Cheryong Industrial CoLtd |
| ECSTELECOM |
Cheryong Industrial and ECSTELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheryong Industrial and ECSTELECOM
The main advantage of trading using opposite Cheryong Industrial and ECSTELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheryong Industrial position performs unexpectedly, ECSTELECOM 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 ECSTELECOM will offset losses from the drop in ECSTELECOM's long position.| Cheryong Industrial vs. Nature and Environment | Cheryong Industrial vs. Busan Industrial Co | Cheryong Industrial vs. Busan Ind | Cheryong Industrial vs. Mirae Asset Daewoo |
| ECSTELECOM vs. Busan Industrial Co | ECSTELECOM vs. Busan Ind | ECSTELECOM vs. Mirae Asset Daewoo | ECSTELECOM vs. Finebesteel |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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