Correlation Between KakaoBank Corp and Daewoo SBI
Can any of the company-specific risk be diversified away by investing in both KakaoBank Corp and Daewoo SBI 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 Daewoo SBI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KakaoBank Corp and Daewoo SBI SPAC, you can compare the effects of market volatilities on KakaoBank Corp and Daewoo SBI 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 Daewoo SBI. Check out your portfolio center. Please also check ongoing floating volatility patterns of KakaoBank Corp and Daewoo SBI.
Diversification Opportunities for KakaoBank Corp and Daewoo SBI
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KakaoBank and Daewoo is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding KakaoBank Corp and Daewoo SBI SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo SBI SPAC 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 Daewoo SBI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo SBI SPAC has no effect on the direction of KakaoBank Corp i.e., KakaoBank Corp and Daewoo SBI go up and down completely randomly.
Pair Corralation between KakaoBank Corp and Daewoo SBI
Assuming the 90 days trading horizon KakaoBank Corp is expected to generate 6.08 times less return on investment than Daewoo SBI. But when comparing it to its historical volatility, KakaoBank Corp is 1.46 times less risky than Daewoo SBI. It trades about 0.04 of its potential returns per unit of risk. Daewoo SBI SPAC is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 241,000 in Daewoo SBI SPAC on September 24, 2024 and sell it today you would earn a total of 39,000 from holding Daewoo SBI SPAC or generate 16.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KakaoBank Corp vs. Daewoo SBI SPAC
Performance |
| Timeline |
| KakaoBank Corp |
| Daewoo SBI SPAC |
KakaoBank Corp and Daewoo SBI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KakaoBank Corp and Daewoo SBI
The main advantage of trading using opposite KakaoBank Corp and Daewoo SBI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KakaoBank Corp position performs unexpectedly, Daewoo SBI 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 Daewoo SBI will offset losses from the drop in Daewoo SBI'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 |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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