Correlation Between FIC Global and Ko Ja
Can any of the company-specific risk be diversified away by investing in both FIC Global and Ko Ja 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 FIC Global and Ko Ja into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIC Global and Ko Ja Cayman, you can compare the effects of market volatilities on FIC Global and Ko Ja 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 FIC Global with a short position of Ko Ja. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIC Global and Ko Ja.
Diversification Opportunities for FIC Global and Ko Ja
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FIC and 5215 is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding FIC Global and Ko Ja Cayman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ko Ja Cayman and FIC Global 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 FIC Global are associated (or correlated) with Ko Ja. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ko Ja Cayman has no effect on the direction of FIC Global i.e., FIC Global and Ko Ja go up and down completely randomly.
Pair Corralation between FIC Global and Ko Ja
Assuming the 90 days trading horizon FIC Global is expected to under-perform the Ko Ja. In addition to that, FIC Global is 1.42 times more volatile than Ko Ja Cayman. It trades about -0.05 of its total potential returns per unit of risk. Ko Ja Cayman is currently generating about -0.07 per unit of volatility. If you would invest 6,080 in Ko Ja Cayman on November 2, 2024 and sell it today you would lose (1,830) from holding Ko Ja Cayman or give up 30.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIC Global vs. Ko Ja Cayman
Performance |
| Timeline |
| FIC Global |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ko Ja Cayman |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
FIC Global and Ko Ja Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIC Global and Ko Ja
The main advantage of trading using opposite FIC Global and Ko Ja positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIC Global position performs unexpectedly, Ko Ja 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 Ko Ja will offset losses from the drop in Ko Ja's long position.The idea behind FIC Global and Ko Ja Cayman pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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