Correlation Between Daewoo SBI and Korea Refractories
Can any of the company-specific risk be diversified away by investing in both Daewoo SBI 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 Daewoo SBI and Korea Refractories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo SBI SPAC and Korea Refractories Co, you can compare the effects of market volatilities on Daewoo SBI 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 Daewoo SBI with a short position of Korea Refractories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo SBI and Korea Refractories.
Diversification Opportunities for Daewoo SBI and Korea Refractories
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daewoo and Korea is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo SBI SPAC and Korea Refractories Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Refractories and Daewoo SBI 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 Daewoo SBI SPAC 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 Daewoo SBI i.e., Daewoo SBI and Korea Refractories go up and down completely randomly.
Pair Corralation between Daewoo SBI and Korea Refractories
Assuming the 90 days trading horizon Daewoo SBI SPAC is expected to under-perform the Korea Refractories. In addition to that, Daewoo SBI is 1.04 times more volatile than Korea Refractories Co. It trades about -0.3 of its total potential returns per unit of risk. Korea Refractories Co is currently generating about -0.18 per unit of volatility. If you would invest 228,500 in Korea Refractories Co on September 1, 2024 and sell it today you would lose (16,500) from holding Korea Refractories Co or give up 7.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Daewoo SBI SPAC vs. Korea Refractories Co
Performance |
| Timeline |
| Daewoo SBI SPAC |
| Korea Refractories |
Daewoo SBI and Korea Refractories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo SBI and Korea Refractories
The main advantage of trading using opposite Daewoo SBI and Korea Refractories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo SBI 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.| Daewoo SBI vs. Choil Aluminum | Daewoo SBI vs. Cube Entertainment | Daewoo SBI vs. Kbi Metal Co | Daewoo SBI vs. Asiana Airlines |
| Korea Refractories vs. Wave Electronics Co | Korea Refractories vs. Insung Information Co | Korea Refractories vs. iNtRON Biotechnology | Korea Refractories vs. Sungwoo Electronics 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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