Correlation Between KakaoBank Corp and Dongwoon Anatech
Can any of the company-specific risk be diversified away by investing in both KakaoBank Corp and Dongwoon Anatech 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 Dongwoon Anatech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KakaoBank Corp and Dongwoon Anatech Co, you can compare the effects of market volatilities on KakaoBank Corp and Dongwoon Anatech 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 Dongwoon Anatech. Check out your portfolio center. Please also check ongoing floating volatility patterns of KakaoBank Corp and Dongwoon Anatech.
Diversification Opportunities for KakaoBank Corp and Dongwoon Anatech
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KakaoBank and Dongwoon is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding KakaoBank Corp and Dongwoon Anatech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwoon Anatech 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 Dongwoon Anatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwoon Anatech has no effect on the direction of KakaoBank Corp i.e., KakaoBank Corp and Dongwoon Anatech go up and down completely randomly.
Pair Corralation between KakaoBank Corp and Dongwoon Anatech
Assuming the 90 days trading horizon KakaoBank Corp is expected to generate 0.66 times more return on investment than Dongwoon Anatech. However, KakaoBank Corp is 1.5 times less risky than Dongwoon Anatech. It trades about 0.25 of its potential returns per unit of risk. Dongwoon Anatech Co is currently generating about 0.05 per unit of risk. If you would invest 2,140,000 in KakaoBank Corp on November 8, 2024 and sell it today you would earn a total of 210,000 from holding KakaoBank Corp or generate 9.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
KakaoBank Corp vs. Dongwoon Anatech Co
Performance |
| Timeline |
| KakaoBank Corp |
| Dongwoon Anatech |
KakaoBank Corp and Dongwoon Anatech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KakaoBank Corp and Dongwoon Anatech
The main advantage of trading using opposite KakaoBank Corp and Dongwoon Anatech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KakaoBank Corp position performs unexpectedly, Dongwoon Anatech 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 Dongwoon Anatech will offset losses from the drop in Dongwoon Anatech's long position.| KakaoBank Corp vs. Aprogen Healthcare Games | KakaoBank Corp vs. Sejong Industrial | KakaoBank Corp vs. Eagon Industrial Co | KakaoBank Corp vs. Hyundai Industrial Co |
| Dongwoon Anatech vs. Display Tech Co | Dongwoon Anatech vs. CG Hi Tech | Dongwoon Anatech vs. LG Household Healthcare | Dongwoon Anatech vs. Korea Computer |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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