Correlation Between Kosdaq Composite and KODEX Bond

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Can any of the company-specific risk be diversified away by investing in both Kosdaq Composite and KODEX Bond 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 KODEX Bond 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 KODEX Bond SRI, you can compare the effects of market volatilities on Kosdaq Composite and KODEX Bond 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 KODEX Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kosdaq Composite and KODEX Bond.

Diversification Opportunities for Kosdaq Composite and KODEX Bond

-0.36

Correlation Coefficient

Kosdaq Composite

KODEX Bond

Very good diversification

The 3 months correlation between Kosdaq and KODEX is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Kosdaq Composite Index and KODEX Bond SRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KODEX Bond SRI 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 KODEX Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KODEX Bond SRI has no effect on the direction of Kosdaq Composite i.e., Kosdaq Composite and KODEX Bond go up and down completely randomly.

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Pair Corralation between Kosdaq Composite and KODEX Bond

Assuming the 90 days trading horizon Kosdaq Composite Index is expected to under-perform the KODEX Bond. In addition to that, Kosdaq Composite is 6.27 times more volatile than KODEX Bond SRI. It trades about -0.01 of its total potential returns per unit of risk. KODEX Bond SRI is currently generating about -0.04 per unit of volatility. If you would invest 10,146,000 in KODEX Bond SRI on October 26, 2024 and sell it today you would lose (64,000) from holding KODEX Bond SRI or give up 0.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Kosdaq Composite Index vs. KODEX Bond SRI

Performance

Timeline

Kosdaq Composite and KODEX Bond Volatility Contrast

Predicted Return Density

Returns

Kosdaq Composite Index

Pair trading matchups for Kosdaq Composite

	Kosdaq Composite vs. Dongkuk Structures Construction
	Kosdaq Composite vs. Asiana Airlines
	Kosdaq Composite vs. Hyundai Home Shopping
	Kosdaq Composite vs. SK Chemicals Co

KODEX Bond SRI

Pair trading matchups for KODEX Bond

	KODEX Bond vs. KODEX 200LONGKOSDAQ150SHORT Futures
	KODEX Bond vs. KODEX K Renewable Energy
	KODEX Bond vs. KODEX SP500TR
	KODEX Bond vs. KODEX Metaverse Nasdaq

Pair Trading with Kosdaq Composite and KODEX Bond

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

	Kosdaq Composite vs. Dongkuk Structures Construction
	Kosdaq Composite vs. Asiana Airlines
	Kosdaq Composite vs. Hyundai Home Shopping
	Kosdaq Composite vs. SK Chemicals Co

The idea behind Kosdaq Composite Index and KODEX Bond SRI 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.

	KODEX Bond vs. KODEX 200LONGKOSDAQ150SHORT Futures
	KODEX Bond vs. KODEX K Renewable Energy
	KODEX Bond vs. KODEX SP500TR
	KODEX Bond vs. KODEX Metaverse Nasdaq

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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