Correlation Between Korea Zinc and Alchera

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

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

Diversification Opportunities for Korea Zinc and Alchera

-0.7

Correlation Coefficient

Korea Zinc  Alchera

Excellent diversification

The 3 months correlation between Korea and Alchera is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Korea Zinc and Alchera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alchera and Korea Zinc 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 Zinc are associated (or correlated) with Alchera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alchera has no effect on the direction of Korea Zinc i.e., Korea Zinc and Alchera go up and down completely randomly.

Pair Corralation between Korea Zinc and Alchera

Assuming the 90 days trading horizon Korea Zinc is expected to generate 1.1 times more return on investment than Alchera. However, Korea Zinc is 1.1 times more volatile than Alchera. It trades about 0.28 of its potential returns per unit of risk. Alchera is currently generating about -0.12 per unit of risk. If you would invest  54,800,000  in Korea Zinc on September 3, 2024 and sell it today you would earn a total of  45,200,000  from holding Korea Zinc or generate 82.48% return on investment over 90 days.

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

Korea Zinc  vs.  Alchera

Korea Zinc

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Zinc are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Korea Zinc sustained solid returns over the last few months and may actually be approaching a breakup point.

Alchera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alchera has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Korea Zinc and Alchera

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

The idea behind Korea Zinc and Alchera 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.