ACE KRX Ownership
| 411060 Etf | 17,125 230.00 1.36% |
Please note, institutional investors have a lot of resources and new technology at their disposal. They can put in a lot of research and financial analysis when reviewing investment options. There are many different types of institutional investors, including banks, hedge funds, insurance companies, and pension plans. One of the main advantages they have over retail investors is the fees paid for trades. As they are buying in large quantities, they can manage their cost more effectively.
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Pair Trading with ACE KRX
One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if ACE KRX position performs unexpectedly, the other equity 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 ACE KRX will appreciate offsetting losses from the drop in the long position's value.The ability to find closely correlated positions to ACE KRX could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace ACE KRX when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back ACE KRX - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling ACE KRX Physical to buy it.
The correlation of ACE KRX is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as ACE KRX moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if ACE KRX Physical moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for ACE KRX can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.