Correlation Between KakaoBank Corp and Digital Imaging
Can any of the company-specific risk be diversified away by investing in both KakaoBank Corp and Digital Imaging 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 Digital Imaging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KakaoBank Corp and Digital Imaging Technology, you can compare the effects of market volatilities on KakaoBank Corp and Digital Imaging 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 Digital Imaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of KakaoBank Corp and Digital Imaging.
Diversification Opportunities for KakaoBank Corp and Digital Imaging
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between KakaoBank and Digital is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding KakaoBank Corp and Digital Imaging Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Imaging Tech 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 Digital Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Imaging Tech has no effect on the direction of KakaoBank Corp i.e., KakaoBank Corp and Digital Imaging go up and down completely randomly.
Pair Corralation between KakaoBank Corp and Digital Imaging
Assuming the 90 days trading horizon KakaoBank Corp is expected to generate 0.49 times more return on investment than Digital Imaging. However, KakaoBank Corp is 2.03 times less risky than Digital Imaging. It trades about -0.01 of its potential returns per unit of risk. Digital Imaging Technology is currently generating about -0.02 per unit of risk. If you would invest 2,690,000 in KakaoBank Corp on September 12, 2024 and sell it today you would lose (275,000) from holding KakaoBank Corp or give up 10.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KakaoBank Corp vs. Digital Imaging Technology
Performance |
| Timeline |
| KakaoBank Corp |
| Digital Imaging Tech |
KakaoBank Corp and Digital Imaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KakaoBank Corp and Digital Imaging
The main advantage of trading using opposite KakaoBank Corp and Digital Imaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KakaoBank Corp position performs unexpectedly, Digital Imaging 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 Digital Imaging will offset losses from the drop in Digital Imaging's long position.| KakaoBank Corp vs. Daedong Steel Co | KakaoBank Corp vs. Bookook Steel | KakaoBank Corp vs. Hironic Co | KakaoBank Corp vs. J Steel Co |
| Digital Imaging vs. Lotte Non Life Insurance | Digital Imaging vs. Hyundai Green Food | Digital Imaging vs. Hanil Iron Steel | Digital Imaging vs. Bookook Steel |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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