Correlation Between SOL IHS and SOL KRX
Can any of the company-specific risk be diversified away by investing in both SOL IHS and SOL KRX 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 SOL IHS and SOL KRX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOL IHS Markit and SOL KRX Climate, you can compare the effects of market volatilities on SOL IHS and SOL KRX 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 SOL IHS with a short position of SOL KRX. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOL IHS and SOL KRX.
Diversification Opportunities for SOL IHS and SOL KRX
Average diversification
The 3 months correlation between SOL and SOL is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding SOL IHS Markit and SOL KRX Climate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOL KRX Climate and SOL IHS 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 SOL IHS Markit are associated (or correlated) with SOL KRX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOL KRX Climate has no effect on the direction of SOL IHS i.e., SOL IHS and SOL KRX go up and down completely randomly.
Pair Corralation between SOL IHS and SOL KRX
Assuming the 90 days trading horizon SOL IHS is expected to generate 1.52 times less return on investment than SOL KRX. In addition to that, SOL IHS is 1.01 times more volatile than SOL KRX Climate. It trades about 0.12 of its total potential returns per unit of risk. SOL KRX Climate is currently generating about 0.18 per unit of volatility. If you would invest 901,500 in SOL KRX Climate on October 24, 2024 and sell it today you would earn a total of 39,000 from holding SOL KRX Climate or generate 4.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOL IHS Markit vs. SOL KRX Climate
Performance |
| Timeline |
| SOL IHS Markit |
| SOL KRX Climate |
SOL IHS and SOL KRX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOL IHS and SOL KRX
The main advantage of trading using opposite SOL IHS and SOL KRX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOL IHS position performs unexpectedly, SOL KRX 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 SOL KRX will offset losses from the drop in SOL KRX's long position.| SOL IHS vs. SOL KRX Climate | SOL IHS vs. SOL K Global Semiconductor | SOL IHS vs. SOL TOP5 Blended | SOL IHS vs. SOL SP500ESG |
| SOL KRX vs. SOL K Global Semiconductor | SOL KRX vs. SOL TOP5 Blended | SOL KRX vs. SOL SP500ESG | SOL KRX vs. SOL Total Bond |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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