Correlation Between Korea Alcohol and NAU IB

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

Diversification Opportunities for Korea Alcohol and NAU IB

-0.07

Correlation Coefficient

Korea Alcohol  NAU IB

Good diversification

The 3 months correlation between Korea and NAU is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Korea Alcohol Industrial and NAU IB Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAU IB Capital 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 NAU IB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAU IB Capital has no effect on the direction of Korea Alcohol i.e., Korea Alcohol and NAU IB go up and down completely randomly.

Pair Corralation between Korea Alcohol and NAU IB

Assuming the 90 days trading horizon Korea Alcohol Industrial is expected to generate 0.17 times more return on investment than NAU IB. However, Korea Alcohol Industrial is 5.77 times less risky than NAU IB. It trades about 0.24 of its potential returns per unit of risk. NAU IB Capital is currently generating about -0.03 per unit of risk. If you would invest  804,670  in Korea Alcohol Industrial on December 22, 2024 and sell it today you would earn a total of  114,330  from holding Korea Alcohol Industrial or generate 14.21% return on investment over 90 days.

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

Korea Alcohol Industrial  vs.  NAU IB Capital

Korea Alcohol Industrial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Alcohol Industrial are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Korea Alcohol sustained solid returns over the last few months and may actually be approaching a breakup point.

NAU IB Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days NAU IB Capital 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.

Pair Trading with Korea Alcohol and NAU IB

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

The idea behind Korea Alcohol Industrial and NAU IB Capital 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.