Correlation Between SOL KRX and SOL K
Can any of the company-specific risk be diversified away by investing in both SOL KRX and SOL K 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 KRX and SOL K into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOL KRX Climate and SOL K Global Semiconductor, you can compare the effects of market volatilities on SOL KRX and SOL K 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 KRX with a short position of SOL K. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOL KRX and SOL K.
Diversification Opportunities for SOL KRX and SOL K
Good diversification
The 3 months correlation between SOL and SOL is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding SOL KRX Climate and SOL K Global Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOL K Global and SOL KRX 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 KRX Climate are associated (or correlated) with SOL K. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOL K Global has no effect on the direction of SOL KRX i.e., SOL KRX and SOL K go up and down completely randomly.
Pair Corralation between SOL KRX and SOL K
Assuming the 90 days trading horizon SOL KRX Climate is expected to under-perform the SOL K. But the etf apears to be less risky and, when comparing its historical volatility, SOL KRX Climate is 1.33 times less risky than SOL K. The etf trades about -0.05 of its potential returns per unit of risk. The SOL K Global Semiconductor is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,518,928 in SOL K Global Semiconductor on November 3, 2024 and sell it today you would earn a total of 389,572 from holding SOL K Global Semiconductor or generate 25.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOL KRX Climate vs. SOL K Global Semiconductor
Performance |
| Timeline |
| SOL KRX Climate |
| SOL K Global |
SOL KRX and SOL K Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOL KRX and SOL K
The main advantage of trading using opposite SOL KRX and SOL K positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOL KRX position performs unexpectedly, SOL K 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 K will offset losses from the drop in SOL K's long position.| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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