Correlation Between KakaoBank Corp and HYBE
Can any of the company-specific risk be diversified away by investing in both KakaoBank Corp and HYBE 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 HYBE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KakaoBank Corp and HYBE Co, you can compare the effects of market volatilities on KakaoBank Corp and HYBE 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 HYBE. Check out your portfolio center. Please also check ongoing floating volatility patterns of KakaoBank Corp and HYBE.
Diversification Opportunities for KakaoBank Corp and HYBE
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between KakaoBank and HYBE is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding KakaoBank Corp and HYBE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYBE 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 HYBE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYBE has no effect on the direction of KakaoBank Corp i.e., KakaoBank Corp and HYBE go up and down completely randomly.
Pair Corralation between KakaoBank Corp and HYBE
Assuming the 90 days trading horizon KakaoBank Corp is expected to generate 1.59 times less return on investment than HYBE. But when comparing it to its historical volatility, KakaoBank Corp is 1.24 times less risky than HYBE. It trades about 0.09 of its potential returns per unit of risk. HYBE Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 18,550,000 in HYBE Co on September 1, 2024 and sell it today you would earn a total of 970,000 from holding HYBE Co or generate 5.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KakaoBank Corp vs. HYBE Co
Performance |
| Timeline |
| KakaoBank Corp |
| HYBE |
KakaoBank Corp and HYBE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KakaoBank Corp and HYBE
The main advantage of trading using opposite KakaoBank Corp and HYBE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KakaoBank Corp position performs unexpectedly, HYBE 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 HYBE will offset losses from the drop in HYBE'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 |
| HYBE vs. Atinum Investment Co | HYBE vs. Dongbu Insurance Co | HYBE vs. Korean Reinsurance Co | HYBE vs. KakaoBank Corp |
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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