Correlation Between KakaoBank Corp and Korea Gas
Can any of the company-specific risk be diversified away by investing in both KakaoBank Corp and Korea Gas 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 Korea Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KakaoBank Corp and Korea Gas, you can compare the effects of market volatilities on KakaoBank Corp and Korea Gas 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 Korea Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of KakaoBank Corp and Korea Gas.
Diversification Opportunities for KakaoBank Corp and Korea Gas
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KakaoBank and Korea is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding KakaoBank Corp and Korea Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Gas 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 Korea Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Gas has no effect on the direction of KakaoBank Corp i.e., KakaoBank Corp and Korea Gas go up and down completely randomly.
Pair Corralation between KakaoBank Corp and Korea Gas
Assuming the 90 days trading horizon KakaoBank Corp is expected to generate 58.45 times less return on investment than Korea Gas. But when comparing it to its historical volatility, KakaoBank Corp is 1.45 times less risky than Korea Gas. It trades about 0.0 of its potential returns per unit of risk. Korea Gas is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,390,000 in Korea Gas on September 12, 2024 and sell it today you would earn a total of 980,000 from holding Korea Gas or generate 41.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KakaoBank Corp vs. Korea Gas
Performance |
| Timeline |
| KakaoBank Corp |
| Korea Gas |
KakaoBank Corp and Korea Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KakaoBank Corp and Korea Gas
The main advantage of trading using opposite KakaoBank Corp and Korea Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KakaoBank Corp position performs unexpectedly, Korea Gas 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 Gas will offset losses from the drop in Korea Gas' long position.| KakaoBank Corp vs. Daishin Information Communications | KakaoBank Corp vs. Dongbang Transport Logistics | KakaoBank Corp vs. SCI Information Service | KakaoBank Corp vs. Dongil Metal Co |
| Korea Gas vs. Pungguk Ethanol Industrial | Korea Gas vs. Cheryong Industrial CoLtd | Korea Gas vs. KakaoBank Corp | Korea Gas vs. MetaLabs Co |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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