Correlation Between NAU IB and Korea Computer
Can any of the company-specific risk be diversified away by investing in both NAU IB and Korea Computer 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 NAU IB and Korea Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NAU IB Capital and Korea Computer, you can compare the effects of market volatilities on NAU IB and Korea Computer 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 NAU IB with a short position of Korea Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAU IB and Korea Computer.
Diversification Opportunities for NAU IB and Korea Computer
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NAU and Korea is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding NAU IB Capital and Korea Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Computer and NAU IB 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 NAU IB Capital are associated (or correlated) with Korea Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Computer has no effect on the direction of NAU IB i.e., NAU IB and Korea Computer go up and down completely randomly.
Pair Corralation between NAU IB and Korea Computer
Assuming the 90 days trading horizon NAU IB Capital is expected to generate 1.88 times more return on investment than Korea Computer. However, NAU IB is 1.88 times more volatile than Korea Computer. It trades about 0.05 of its potential returns per unit of risk. Korea Computer is currently generating about 0.05 per unit of risk. If you would invest 98,459 in NAU IB Capital on November 3, 2024 and sell it today you would earn a total of 16,541 from holding NAU IB Capital or generate 16.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NAU IB Capital vs. Korea Computer
Performance |
| Timeline |
| NAU IB Capital |
| Korea Computer |
NAU IB and Korea Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NAU IB and Korea Computer
The main advantage of trading using opposite NAU IB and Korea Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAU IB position performs unexpectedly, Korea Computer 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 Computer will offset losses from the drop in Korea Computer's long position.| NAU IB vs. Kukdo Chemical Co | NAU IB vs. Hanwha Chemical Corp | NAU IB vs. Jeong Moon Information | NAU IB vs. Youl Chon Chemical |
| Korea Computer vs. Hankook Steel Co | Korea Computer vs. Fine Besteel Co | Korea Computer vs. INSUN Environmental New | Korea Computer vs. Wonil Special Steel |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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