Correlation Between Kosdaq Composite and NH Investment

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

Diversification Opportunities for Kosdaq Composite and NH Investment

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Kosdaq and 550022 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kosdaq Composite Index and NH Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Investment Securities 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 NH Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Investment Securities has no effect on the direction of Kosdaq Composite i.e., Kosdaq Composite and NH Investment go up and down completely randomly.
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Pair Corralation between Kosdaq Composite and NH Investment

If you would invest (100.00) in NH Investment Securities on September 12, 2024 and sell it today you would earn a total of  100.00  from holding NH Investment Securities or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Kosdaq Composite Index  vs.  NH Investment Securities

 Performance 
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Kosdaq Composite and NH Investment Volatility Contrast

   Predicted Return Density   
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Pair Trading with Kosdaq Composite and NH Investment

The main advantage of trading using opposite Kosdaq Composite and NH Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kosdaq Composite position performs unexpectedly, NH Investment 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 NH Investment will offset losses from the drop in NH Investment's long position.
The idea behind Kosdaq Composite Index and NH Investment Securities 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.
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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