Correlation Between Mirae Asset and Korea Environment

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

By analyzing existing cross correlation between Mirae Asset Daewoo and Korea Environment Technology, you can compare the effects of market volatilities on Mirae Asset and Korea Environment 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 Mirae Asset with a short position of Korea Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mirae Asset and Korea Environment.

Diversification Opportunities for Mirae Asset and Korea Environment

-0.46

Correlation Coefficient

Mirae Asset  Korea Environment

Very good diversification

The 3 months correlation between Mirae and Korea is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Mirae Asset Daewoo and Korea Environment Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Environment and Mirae Asset 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 Mirae Asset Daewoo are associated (or correlated) with Korea Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Environment has no effect on the direction of Mirae Asset i.e., Mirae Asset and Korea Environment go up and down completely randomly.

Pair Corralation between Mirae Asset and Korea Environment

Assuming the 90 days trading horizon Mirae Asset Daewoo is expected to generate 2.03 times more return on investment than Korea Environment. However, Mirae Asset is 2.03 times more volatile than Korea Environment Technology. It trades about 0.21 of its potential returns per unit of risk. Korea Environment Technology is currently generating about -0.05 per unit of risk. If you would invest  401,638  in Mirae Asset Daewoo on December 30, 2024 and sell it today you would earn a total of  51,362  from holding Mirae Asset Daewoo or generate 12.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Mirae Asset Daewoo  vs.  Korea Environment Technology

Mirae Asset Daewoo

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mirae Asset Daewoo are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mirae Asset sustained solid returns over the last few months and may actually be approaching a breakup point.

Korea Environment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Korea Environment Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Korea Environment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mirae Asset and Korea Environment

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

The idea behind Mirae Asset Daewoo and Korea Environment Technology 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.