Correlation Between ZUM Internet and Korea Information
Can any of the company-specific risk be diversified away by investing in both ZUM Internet 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 ZUM Internet and Korea Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZUM Internet Corp and Korea Information Communications, you can compare the effects of market volatilities on ZUM Internet 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 ZUM Internet with a short position of Korea Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZUM Internet and Korea Information.
Diversification Opportunities for ZUM Internet and Korea Information
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ZUM and Korea is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ZUM Internet Corp and Korea Information Communicatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information and ZUM Internet 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 ZUM Internet Corp 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 ZUM Internet i.e., ZUM Internet and Korea Information go up and down completely randomly.
Pair Corralation between ZUM Internet and Korea Information
Assuming the 90 days trading horizon ZUM Internet Corp is expected to under-perform the Korea Information. In addition to that, ZUM Internet is 2.3 times more volatile than Korea Information Communications. It trades about -0.12 of its total potential returns per unit of risk. Korea Information Communications is currently generating about -0.03 per unit of volatility. If you would invest 834,000 in Korea Information Communications on August 28, 2024 and sell it today you would lose (14,000) from holding Korea Information Communications or give up 1.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ZUM Internet Corp vs. Korea Information Communicatio
Performance |
| Timeline |
| ZUM Internet Corp |
| Korea Information |
ZUM Internet and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZUM Internet and Korea Information
The main advantage of trading using opposite ZUM Internet and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZUM Internet 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.| ZUM Internet vs. Korean Reinsurance Co | ZUM Internet vs. Shinsegae Information Communication | ZUM Internet vs. Nice Information Telecommunication | ZUM Internet vs. Daejung Chemicals Metals |
| Korea Information vs. Korea Real Estate | Korea Information vs. Korea Ratings Co | Korea Information vs. IQuest Co | Korea Information vs. Wonbang Tech 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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