Correlation Between Kakao Games and LS Materials
Can any of the company-specific risk be diversified away by investing in both Kakao Games and LS Materials 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 LS Materials 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 LS Materials, you can compare the effects of market volatilities on Kakao Games and LS Materials 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 LS Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kakao Games and LS Materials.
Diversification Opportunities for Kakao Games and LS Materials
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kakao and 417200 is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kakao Games Corp and LS Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LS Materials 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 LS Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LS Materials has no effect on the direction of Kakao Games i.e., Kakao Games and LS Materials go up and down completely randomly.
Pair Corralation between Kakao Games and LS Materials
Assuming the 90 days trading horizon Kakao Games Corp is expected to generate 0.88 times more return on investment than LS Materials. However, Kakao Games Corp is 1.13 times less risky than LS Materials. It trades about 0.06 of its potential returns per unit of risk. LS Materials is currently generating about -0.48 per unit of risk. If you would invest 1,770,000 in Kakao Games Corp on September 3, 2024 and sell it today you would earn a total of 45,000 from holding Kakao Games Corp or generate 2.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kakao Games Corp vs. LS Materials
Performance |
| Timeline |
| Kakao Games Corp |
| LS Materials |
Kakao Games and LS Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kakao Games and LS Materials
The main advantage of trading using opposite Kakao Games and LS Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kakao Games position performs unexpectedly, LS Materials 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 LS Materials will offset losses from the drop in LS Materials' long position.| Kakao Games vs. Posco ICT | Kakao Games vs. Devsisters corporation | Kakao Games vs. Alchera | Kakao Games vs. Nice Information Telecommunication |
| LS Materials vs. Samsung Electronics Co | LS Materials vs. Samsung Electronics Co | LS Materials vs. LG Energy Solution | LS Materials vs. SK Hynix |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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