Correlation Between KakaoBank Corp and UIL
Can any of the company-specific risk be diversified away by investing in both KakaoBank Corp and UIL 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 UIL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KakaoBank Corp and UIL Co, you can compare the effects of market volatilities on KakaoBank Corp and UIL 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 UIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of KakaoBank Corp and UIL.
Diversification Opportunities for KakaoBank Corp and UIL
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between KakaoBank and UIL is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding KakaoBank Corp and UIL Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UIL Co 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 UIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UIL Co has no effect on the direction of KakaoBank Corp i.e., KakaoBank Corp and UIL go up and down completely randomly.
Pair Corralation between KakaoBank Corp and UIL
Assuming the 90 days trading horizon KakaoBank Corp is expected to under-perform the UIL. But the stock apears to be less risky and, when comparing its historical volatility, KakaoBank Corp is 1.46 times less risky than UIL. The stock trades about -0.31 of its potential returns per unit of risk. The UIL Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 516,000 in UIL Co on October 20, 2024 and sell it today you would earn a total of 46,000 from holding UIL Co or generate 8.91% 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. UIL Co
Performance |
| Timeline |
| KakaoBank Corp |
| UIL Co |
KakaoBank Corp and UIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KakaoBank Corp and UIL
The main advantage of trading using opposite KakaoBank Corp and UIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KakaoBank Corp position performs unexpectedly, UIL 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 UIL will offset losses from the drop in UIL's long position.| KakaoBank Corp vs. NH Investment Securities | KakaoBank Corp vs. LG Household Healthcare | KakaoBank Corp vs. Samyung Trading Co | KakaoBank Corp vs. DSC Investment |
| UIL vs. BIT Computer Co | UIL vs. CG Hi Tech | UIL vs. EBEST Investment Securities | UIL vs. NH Investment Securities |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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