Correlation Between KakaoBank Corp and SH Energy
Can any of the company-specific risk be diversified away by investing in both KakaoBank Corp and SH Energy 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 KakaoBank Corp and SH Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KakaoBank Corp and SH Energy Chemical, you can compare the effects of market volatilities on KakaoBank Corp and SH Energy 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 KakaoBank Corp with a short position of SH Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of KakaoBank Corp and SH Energy.
Diversification Opportunities for KakaoBank Corp and SH Energy
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KakaoBank and 002360 is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding KakaoBank Corp and SH Energy Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SH Energy Chemical and KakaoBank Corp 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 KakaoBank Corp are associated (or correlated) with SH Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SH Energy Chemical has no effect on the direction of KakaoBank Corp i.e., KakaoBank Corp and SH Energy go up and down completely randomly.
Pair Corralation between KakaoBank Corp and SH Energy
Assuming the 90 days trading horizon KakaoBank Corp is expected to generate 0.84 times more return on investment than SH Energy. However, KakaoBank Corp is 1.2 times less risky than SH Energy. It trades about 0.04 of its potential returns per unit of risk. SH Energy Chemical is currently generating about -0.1 per unit of risk. If you would invest 2,170,000 in KakaoBank Corp on September 24, 2024 and sell it today you would earn a total of 40,000 from holding KakaoBank Corp or generate 1.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KakaoBank Corp vs. SH Energy Chemical
Performance |
| Timeline |
| KakaoBank Corp |
| SH Energy Chemical |
KakaoBank Corp and SH Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KakaoBank Corp and SH Energy
The main advantage of trading using opposite KakaoBank Corp and SH Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KakaoBank Corp position performs unexpectedly, SH Energy 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 SH Energy will offset losses from the drop in SH Energy's long position.| KakaoBank Corp vs. Shinhan Financial Group | KakaoBank Corp vs. Hana Financial | KakaoBank Corp vs. Woori Financial Group | KakaoBank Corp vs. Industrial Bank |
| SH Energy vs. Koh Young Technology | SH Energy vs. Koryo Credit Information | SH Energy vs. KakaoBank Corp | SH Energy vs. KB Financial Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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