Correlation Between Korea Alcohol and GemVaxKAEL CoLtd

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

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

Diversification Opportunities for Korea Alcohol and GemVaxKAEL CoLtd

0.47

Correlation Coefficient

Korea Alcohol  GemVaxKAEL CoLtd

Very weak diversification

The 3 months correlation between Korea and GemVaxKAEL is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Korea Alcohol Industrial and GemVaxKAEL CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GemVaxKAEL CoLtd and Korea Alcohol 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 Alcohol Industrial are associated (or correlated) with GemVaxKAEL CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GemVaxKAEL CoLtd has no effect on the direction of Korea Alcohol i.e., Korea Alcohol and GemVaxKAEL CoLtd go up and down completely randomly.

Pair Corralation between Korea Alcohol and GemVaxKAEL CoLtd

Assuming the 90 days trading horizon Korea Alcohol Industrial is expected to generate 0.49 times more return on investment than GemVaxKAEL CoLtd. However, Korea Alcohol Industrial is 2.05 times less risky than GemVaxKAEL CoLtd. It trades about 0.13 of its potential returns per unit of risk. GemVaxKAEL CoLtd is currently generating about -0.14 per unit of risk. If you would invest  798,874  in Korea Alcohol Industrial on October 6, 2024 and sell it today you would earn a total of  39,126  from holding Korea Alcohol Industrial or generate 4.9% return on investment over 90 days.

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

Korea Alcohol Industrial  vs.  GemVaxKAEL CoLtd

Korea Alcohol Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Korea Alcohol Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

GemVaxKAEL CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GemVaxKAEL CoLtd 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Korea Alcohol and GemVaxKAEL CoLtd

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

The idea behind Korea Alcohol Industrial and GemVaxKAEL 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.