Correlation Between Korea Refractories and MITECH CoLtd

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

By analyzing existing cross correlation between Korea Refractories Co and MITECH CoLtd, you can compare the effects of market volatilities on Korea Refractories and MITECH CoLtd 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 Korea Refractories with a short position of MITECH CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Refractories and MITECH CoLtd.

Diversification Opportunities for Korea Refractories and MITECH CoLtd

0.34

Correlation Coefficient

Korea Refractories  MITECH CoLtd

Weak diversification

The 3 months correlation between Korea and MITECH is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Korea Refractories Co and MITECH CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MITECH CoLtd and Korea Refractories 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 Korea Refractories Co are associated (or correlated) with MITECH CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MITECH CoLtd has no effect on the direction of Korea Refractories i.e., Korea Refractories and MITECH CoLtd go up and down completely randomly.

Pair Corralation between Korea Refractories and MITECH CoLtd

Assuming the 90 days trading horizon Korea Refractories Co is expected to under-perform the MITECH CoLtd. But the stock apears to be less risky and, when comparing its historical volatility, Korea Refractories Co is 1.45 times less risky than MITECH CoLtd. The stock trades about -0.05 of its potential returns per unit of risk. The MITECH CoLtd is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  968,984  in MITECH CoLtd on October 4, 2024 and sell it today you would lose (134,984) from holding MITECH CoLtd or give up 13.93% of portfolio value over 90 days.

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

Korea Refractories Co  vs.  MITECH CoLtd

Korea Refractories

Risk-Adjusted Performance

0 of 100

Very Weak

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

MITECH CoLtd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MITECH CoLtd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, MITECH CoLtd is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Korea Refractories and MITECH CoLtd

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

The idea behind Korea Refractories Co and MITECH CoLtd 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.