Correlation Between KakaoBank Corp and Namyang Dairy
Can any of the company-specific risk be diversified away by investing in both KakaoBank Corp and Namyang Dairy 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 Namyang Dairy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KakaoBank Corp and Namyang Dairy, you can compare the effects of market volatilities on KakaoBank Corp and Namyang Dairy 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 Namyang Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of KakaoBank Corp and Namyang Dairy.
Diversification Opportunities for KakaoBank Corp and Namyang Dairy
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KakaoBank and Namyang is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding KakaoBank Corp and Namyang Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namyang Dairy 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 Namyang Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namyang Dairy has no effect on the direction of KakaoBank Corp i.e., KakaoBank Corp and Namyang Dairy go up and down completely randomly.
Pair Corralation between KakaoBank Corp and Namyang Dairy
Assuming the 90 days trading horizon KakaoBank Corp is expected to under-perform the Namyang Dairy. In addition to that, KakaoBank Corp is 1.21 times more volatile than Namyang Dairy. It trades about -0.26 of its total potential returns per unit of risk. Namyang Dairy is currently generating about -0.09 per unit of volatility. If you would invest 6,320,000 in Namyang Dairy on October 12, 2024 and sell it today you would lose (220,000) from holding Namyang Dairy or give up 3.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
KakaoBank Corp vs. Namyang Dairy
Performance |
| Timeline |
| KakaoBank Corp |
| Namyang Dairy |
KakaoBank Corp and Namyang Dairy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KakaoBank Corp and Namyang Dairy
The main advantage of trading using opposite KakaoBank Corp and Namyang Dairy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KakaoBank Corp position performs unexpectedly, Namyang Dairy 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 Namyang Dairy will offset losses from the drop in Namyang Dairy's long position.| KakaoBank Corp vs. Korean Drug Co | KakaoBank Corp vs. Nice Information Telecommunication | KakaoBank Corp vs. Daou Data Corp | KakaoBank Corp vs. Daishin Information Communications |
| Namyang Dairy vs. KakaoBank Corp | Namyang Dairy vs. Woori Financial Group | Namyang Dairy vs. Hankuk Steel Wire | Namyang Dairy vs. INSUN Environmental New |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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