Correlation Between Kosdaq Composite and FarmStory

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Can any of the company-specific risk be diversified away by investing in both Kosdaq Composite and FarmStory 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 Kosdaq Composite and FarmStory into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kosdaq Composite Index and FarmStory Co, you can compare the effects of market volatilities on Kosdaq Composite and FarmStory 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 Kosdaq Composite with a short position of FarmStory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kosdaq Composite and FarmStory.

Diversification Opportunities for Kosdaq Composite and FarmStory

0.87

Correlation Coefficient

Kosdaq Composite

FarmStory

Very poor diversification

The 3 months correlation between Kosdaq and FarmStory is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Kosdaq Composite Index and FarmStory Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FarmStory and Kosdaq Composite 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 Kosdaq Composite Index are associated (or correlated) with FarmStory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FarmStory has no effect on the direction of Kosdaq Composite i.e., Kosdaq Composite and FarmStory go up and down completely randomly.

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Pair Corralation between Kosdaq Composite and FarmStory

Assuming the 90 days trading horizon Kosdaq Composite Index is expected to generate 0.91 times more return on investment than FarmStory. However, Kosdaq Composite Index is 1.1 times less risky than FarmStory. It trades about -0.19 of its potential returns per unit of risk. FarmStory Co is currently generating about -0.19 per unit of risk. If you would invest 74,048 in Kosdaq Composite Index on August 29, 2024 and sell it today you would lose (4,835) from holding Kosdaq Composite Index or give up 6.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Kosdaq Composite Index vs. FarmStory Co

Performance

Timeline

Kosdaq Composite and FarmStory Volatility Contrast

Predicted Return Density

Returns

Kosdaq Composite Index

Pair trading matchups for Kosdaq Composite

	Kosdaq Composite vs. Korea Air Svc
	Kosdaq Composite vs. Mobileleader CoLtd
	Kosdaq Composite vs. Ssangyong Information Communication
	Kosdaq Composite vs. TOPMATERIAL LTD

FarmStory Co

Pair trading matchups for FarmStory

	FarmStory vs. Samsung Electronics Co
	FarmStory vs. Samsung Electronics Co
	FarmStory vs. Hyundai Motor Co
	FarmStory vs. Hyundai Motor

Pair Trading with Kosdaq Composite and FarmStory

The main advantage of trading using opposite Kosdaq Composite and FarmStory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kosdaq Composite position performs unexpectedly, FarmStory 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 FarmStory will offset losses from the drop in FarmStory's long position.

	Kosdaq Composite vs. Korea Air Svc
	Kosdaq Composite vs. Mobileleader CoLtd
	Kosdaq Composite vs. Ssangyong Information Communication
	Kosdaq Composite vs. TOPMATERIAL LTD

The idea behind Kosdaq Composite Index and FarmStory Co 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.

	FarmStory vs. Samsung Electronics Co
	FarmStory vs. Samsung Electronics Co
	FarmStory vs. Hyundai Motor Co
	FarmStory vs. Hyundai Motor

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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 Stocks Directory module to find actively traded stocks across global markets.

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