Correlation Between Kakao Games and THiRA UTECH
Can any of the company-specific risk be diversified away by investing in both Kakao Games and THiRA UTECH 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 Kakao Games and THiRA UTECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kakao Games Corp and THiRA UTECH LTD, you can compare the effects of market volatilities on Kakao Games and THiRA UTECH 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 Kakao Games with a short position of THiRA UTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kakao Games and THiRA UTECH.
Diversification Opportunities for Kakao Games and THiRA UTECH
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kakao and THiRA is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kakao Games Corp and THiRA UTECH LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THiRA UTECH LTD and Kakao Games 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 Kakao Games Corp are associated (or correlated) with THiRA UTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THiRA UTECH LTD has no effect on the direction of Kakao Games i.e., Kakao Games and THiRA UTECH go up and down completely randomly.
Pair Corralation between Kakao Games and THiRA UTECH
Assuming the 90 days trading horizon Kakao Games Corp is expected to under-perform the THiRA UTECH. But the stock apears to be less risky and, when comparing its historical volatility, Kakao Games Corp is 1.45 times less risky than THiRA UTECH. The stock trades about -0.01 of its potential returns per unit of risk. The THiRA UTECH LTD is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 526,000 in THiRA UTECH LTD on November 3, 2024 and sell it today you would earn a total of 37,000 from holding THiRA UTECH LTD or generate 7.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Kakao Games Corp vs. THiRA UTECH LTD
Performance |
| Timeline |
| Kakao Games Corp |
| THiRA UTECH LTD |
Kakao Games and THiRA UTECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kakao Games and THiRA UTECH
The main advantage of trading using opposite Kakao Games and THiRA UTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kakao Games position performs unexpectedly, THiRA UTECH 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 THiRA UTECH will offset losses from the drop in THiRA UTECH's long position.The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Kakao Games as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Kakao Games' systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Kakao Games' unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Kakao Games Corp.
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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