Correlation Between KakaoBank Corp and Daiyang Metal
Can any of the company-specific risk be diversified away by investing in both KakaoBank Corp and Daiyang Metal 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 Daiyang Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KakaoBank Corp and Daiyang Metal Co, you can compare the effects of market volatilities on KakaoBank Corp and Daiyang Metal 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 Daiyang Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of KakaoBank Corp and Daiyang Metal.
Diversification Opportunities for KakaoBank Corp and Daiyang Metal
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KakaoBank and Daiyang is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding KakaoBank Corp and Daiyang Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiyang Metal 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 Daiyang Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daiyang Metal has no effect on the direction of KakaoBank Corp i.e., KakaoBank Corp and Daiyang Metal go up and down completely randomly.
Pair Corralation between KakaoBank Corp and Daiyang Metal
Assuming the 90 days trading horizon KakaoBank Corp is expected to generate 0.49 times more return on investment than Daiyang Metal. However, KakaoBank Corp is 2.04 times less risky than Daiyang Metal. It trades about -0.17 of its potential returns per unit of risk. Daiyang Metal Co is currently generating about -0.16 per unit of risk. If you would invest 2,160,000 in KakaoBank Corp on October 28, 2024 and sell it today you would lose (95,000) from holding KakaoBank Corp or give up 4.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KakaoBank Corp vs. Daiyang Metal Co
Performance |
| Timeline |
| KakaoBank Corp |
| Daiyang Metal |
KakaoBank Corp and Daiyang Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KakaoBank Corp and Daiyang Metal
The main advantage of trading using opposite KakaoBank Corp and Daiyang Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KakaoBank Corp position performs unexpectedly, Daiyang Metal 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 Daiyang Metal will offset losses from the drop in Daiyang Metal'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 |
| Daiyang Metal vs. KB Financial Group | Daiyang Metal vs. Shinhan Financial Group | Daiyang Metal vs. Hana Financial | Daiyang Metal vs. Woori 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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