Correlation Between Korea Alcohol and Aprogen Healthcare

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

Diversification Opportunities for Korea Alcohol and Aprogen Healthcare

0.43

Correlation Coefficient

Korea Alcohol  Aprogen Healthcare

Very weak diversification

The 3 months correlation between Korea and Aprogen is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Korea Alcohol Industrial and Aprogen Healthcare Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aprogen Healthcare Games 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 Aprogen Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aprogen Healthcare Games has no effect on the direction of Korea Alcohol i.e., Korea Alcohol and Aprogen Healthcare go up and down completely randomly.

Pair Corralation between Korea Alcohol and Aprogen Healthcare

Assuming the 90 days trading horizon Korea Alcohol Industrial is expected to under-perform the Aprogen Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Korea Alcohol Industrial is 3.17 times less risky than Aprogen Healthcare. The stock trades about -0.14 of its potential returns per unit of risk. The Aprogen Healthcare Games is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  56,000  in Aprogen Healthcare Games on September 22, 2024 and sell it today you would earn a total of  2,400  from holding Aprogen Healthcare Games or generate 4.29% 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.  Aprogen Healthcare Games

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 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.

Aprogen Healthcare Games

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aprogen Healthcare Games are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aprogen Healthcare may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Korea Alcohol and Aprogen Healthcare

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

The idea behind Korea Alcohol Industrial and Aprogen Healthcare Games 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..