Correlation Between Korean Reinsurance and Digital Imaging
Can any of the company-specific risk be diversified away by investing in both Korean Reinsurance and Digital Imaging 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 Korean Reinsurance and Digital Imaging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korean Reinsurance Co and Digital Imaging Technology, you can compare the effects of market volatilities on Korean Reinsurance and Digital Imaging 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 Korean Reinsurance with a short position of Digital Imaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Reinsurance and Digital Imaging.
Diversification Opportunities for Korean Reinsurance and Digital Imaging
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Korean and Digital is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Korean Reinsurance Co and Digital Imaging Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Imaging Tech and Korean Reinsurance 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 Korean Reinsurance Co are associated (or correlated) with Digital Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Imaging Tech has no effect on the direction of Korean Reinsurance i.e., Korean Reinsurance and Digital Imaging go up and down completely randomly.
Pair Corralation between Korean Reinsurance and Digital Imaging
Assuming the 90 days trading horizon Korean Reinsurance is expected to generate 2.21 times less return on investment than Digital Imaging. But when comparing it to its historical volatility, Korean Reinsurance Co is 3.02 times less risky than Digital Imaging. It trades about 0.08 of its potential returns per unit of risk. Digital Imaging Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 560,493 in Digital Imaging Technology on September 26, 2024 and sell it today you would earn a total of 729,507 from holding Digital Imaging Technology or generate 130.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Korean Reinsurance Co vs. Digital Imaging Technology
Performance |
Timeline |
Korean Reinsurance |
Digital Imaging Tech |
Korean Reinsurance and Digital Imaging Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Korean Reinsurance and Digital Imaging
The main advantage of trading using opposite Korean Reinsurance and Digital Imaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Reinsurance position performs unexpectedly, Digital Imaging 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 Digital Imaging will offset losses from the drop in Digital Imaging's long position.Korean Reinsurance vs. EV Advanced Material | Korean Reinsurance vs. Samsung Life Insurance | Korean Reinsurance vs. National Plastic Co | Korean Reinsurance vs. Daejung Chemicals Metals |
Digital Imaging vs. Daishin Information Communications | Digital Imaging vs. Mobile Appliance | Digital Imaging vs. Korean Reinsurance Co | Digital Imaging vs. SK Chemicals Co |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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