Correlation Between Taegu Broadcasting and Korea Alcohol

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

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

Diversification Opportunities for Taegu Broadcasting and Korea Alcohol

-0.48

Correlation Coefficient

Taegu Broadcasting  Korea Alcohol

Very good diversification

The 3 months correlation between Taegu and Korea is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Taegu Broadcasting and Korea Alcohol Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Alcohol Industrial and Taegu Broadcasting 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 Taegu Broadcasting are associated (or correlated) with Korea Alcohol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Alcohol Industrial has no effect on the direction of Taegu Broadcasting i.e., Taegu Broadcasting and Korea Alcohol go up and down completely randomly.

Pair Corralation between Taegu Broadcasting and Korea Alcohol

Assuming the 90 days trading horizon Taegu Broadcasting is expected to under-perform the Korea Alcohol. In addition to that, Taegu Broadcasting is 1.8 times more volatile than Korea Alcohol Industrial. It trades about -0.16 of its total potential returns per unit of risk. Korea Alcohol Industrial is currently generating about 0.67 per unit of volatility. If you would invest  759,269  in Korea Alcohol Industrial on October 12, 2024 and sell it today you would earn a total of  104,731  from holding Korea Alcohol Industrial or generate 13.79% return on investment over 90 days.

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

Taegu Broadcasting  vs.  Korea Alcohol Industrial

Taegu Broadcasting

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Taegu Broadcasting are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Taegu Broadcasting may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 somewhat strong basic indicators, Korea Alcohol is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Taegu Broadcasting and Korea Alcohol

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

The idea behind Taegu Broadcasting and Korea Alcohol Industrial 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.