Correlation Between Korea Information and Stic Investments

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Can any of the company-specific risk be diversified away by investing in both Korea Information and Stic Investments 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 Information and Stic Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Information Communications and Stic Investments, you can compare the effects of market volatilities on Korea Information and Stic Investments 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 Information with a short position of Stic Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Stic Investments.

Diversification Opportunities for Korea Information and Stic Investments

KoreaSticDiversified AwayKoreaSticDiversified Away100%
-0.33
  Correlation Coefficient

Very good diversification

The 3 months correlation between Korea and Stic is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Communicatio and Stic Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stic Investments and Korea Information 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 Information Communications are associated (or correlated) with Stic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stic Investments has no effect on the direction of Korea Information i.e., Korea Information and Stic Investments go up and down completely randomly.

Pair Corralation between Korea Information and Stic Investments

Assuming the 90 days trading horizon Korea Information Communications is expected to generate 0.8 times more return on investment than Stic Investments. However, Korea Information Communications is 1.25 times less risky than Stic Investments. It trades about 0.12 of its potential returns per unit of risk. Stic Investments is currently generating about -0.28 per unit of risk. If you would invest  780,000  in Korea Information Communications on October 28, 2024 and sell it today you would earn a total of  16,000  from holding Korea Information Communications or generate 2.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Korea Information Communicatio  vs.  Stic Investments

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -10-50510
JavaScript chart by amCharts 3.21.15025770 026890
       Timeline  
Korea Information 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Korea Information Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Korea Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan7,6007,7007,8007,9008,0008,1008,2008,3008,400
Stic Investments 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Stic Investments are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Stic Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan7,0007,5008,0008,5009,000

Korea Information and Stic Investments Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.89-1.41-0.93-0.45-0.0079340.420.91.381.86 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.15025770 026890
       Returns  

Pair Trading with Korea Information and Stic Investments

The main advantage of trading using opposite Korea Information and Stic Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, Stic Investments 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 Stic Investments will offset losses from the drop in Stic Investments' long position.
The idea behind Korea Information Communications and Stic Investments 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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