Correlation Between Mirae Asset and Carriesoft

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

Diversification Opportunities for Mirae Asset and Carriesoft

0.2

Correlation Coefficient

Mirae Asset  Carriesoft

Modest diversification

The 3 months correlation between Mirae and Carriesoft is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Mirae Asset Daewoo and Carriesoft Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carriesoft 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 Carriesoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carriesoft has no effect on the direction of Mirae Asset i.e., Mirae Asset and Carriesoft go up and down completely randomly.

Pair Corralation between Mirae Asset and Carriesoft

Assuming the 90 days trading horizon Mirae Asset is expected to generate 65.79 times less return on investment than Carriesoft. But when comparing it to its historical volatility, Mirae Asset Daewoo is 3.72 times less risky than Carriesoft. It trades about 0.01 of its potential returns per unit of risk. Carriesoft Co is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  380,500  in Carriesoft Co on December 2, 2024 and sell it today you would earn a total of  244,500  from holding Carriesoft Co or generate 64.26% return on investment over 90 days.

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

Mirae Asset Daewoo  vs.  Carriesoft Co

Mirae Asset Daewoo

Risk-Adjusted Performance

Very Weak

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

Carriesoft

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carriesoft Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Carriesoft sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mirae Asset and Carriesoft

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

The idea behind Mirae Asset Daewoo and Carriesoft Co 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.