Correlation Between KakaoBank Corp and NICE Information
Can any of the company-specific risk be diversified away by investing in both KakaoBank Corp and NICE Information 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 NICE Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KakaoBank Corp and NICE Information Service, you can compare the effects of market volatilities on KakaoBank Corp and NICE Information 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 NICE Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of KakaoBank Corp and NICE Information.
Diversification Opportunities for KakaoBank Corp and NICE Information
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KakaoBank and NICE is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding KakaoBank Corp and NICE Information Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NICE Information Service 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 NICE Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NICE Information Service has no effect on the direction of KakaoBank Corp i.e., KakaoBank Corp and NICE Information go up and down completely randomly.
Pair Corralation between KakaoBank Corp and NICE Information
Assuming the 90 days trading horizon KakaoBank Corp is expected to generate 2.36 times less return on investment than NICE Information. In addition to that, KakaoBank Corp is 1.62 times more volatile than NICE Information Service. It trades about 0.04 of its total potential returns per unit of risk. NICE Information Service is currently generating about 0.16 per unit of volatility. If you would invest 1,164,000 in NICE Information Service on September 24, 2024 and sell it today you would earn a total of 75,000 from holding NICE Information Service or generate 6.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KakaoBank Corp vs. NICE Information Service
Performance |
| Timeline |
| KakaoBank Corp |
| NICE Information Service |
KakaoBank Corp and NICE Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KakaoBank Corp and NICE Information
The main advantage of trading using opposite KakaoBank Corp and NICE Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KakaoBank Corp position performs unexpectedly, NICE Information 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 NICE Information will offset losses from the drop in NICE Information'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 |
| NICE Information vs. InfoBank | NICE Information vs. Samyang Foods Co | NICE Information vs. Lotte Chilsung Beverage | NICE Information vs. Samlip General Foods |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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