Correlation Between Settlebank and Korea Information
Can any of the company-specific risk be diversified away by investing in both Settlebank and Korea Information 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 Settlebank and Korea Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Settlebank and Korea Information Engineering, you can compare the effects of market volatilities on Settlebank and Korea Information 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 Settlebank with a short position of Korea Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Settlebank and Korea Information.
Diversification Opportunities for Settlebank and Korea Information
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Settlebank and Korea is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Settlebank and Korea Information Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information and Settlebank 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 Settlebank are associated (or correlated) with Korea Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of Settlebank i.e., Settlebank and Korea Information go up and down completely randomly.
Pair Corralation between Settlebank and Korea Information
Assuming the 90 days trading horizon Settlebank is expected to under-perform the Korea Information. In addition to that, Settlebank is 1.05 times more volatile than Korea Information Engineering. It trades about -0.08 of its total potential returns per unit of risk. Korea Information Engineering is currently generating about 0.08 per unit of volatility. If you would invest 240,500 in Korea Information Engineering on September 24, 2024 and sell it today you would earn a total of 10,500 from holding Korea Information Engineering or generate 4.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Settlebank vs. Korea Information Engineering
Performance |
| Timeline |
| Settlebank |
| Korea Information |
Settlebank and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Settlebank and Korea Information
The main advantage of trading using opposite Settlebank and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Settlebank position performs unexpectedly, Korea Information 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 Information will offset losses from the drop in Korea Information's long position.The idea behind Settlebank and Korea Information Engineering pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Korea Information vs. Dongsin Engineering Construction | Korea Information vs. Doosan Fuel Cell | Korea Information vs. Daishin Balance 1 | Korea Information vs. Total Soft Bank |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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