Correlation Between Korea Real and Daol Investment
Can any of the company-specific risk be diversified away by investing in both Korea Real and Daol Investment 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 Real and Daol Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Real Estate and Daol Investment Securities, you can compare the effects of market volatilities on Korea Real and Daol Investment 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 Real with a short position of Daol Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and Daol Investment.
Diversification Opportunities for Korea Real and Daol Investment
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Korea and Daol is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and Daol Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daol Investment Secu and Korea Real 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 Real Estate are associated (or correlated) with Daol Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daol Investment Secu has no effect on the direction of Korea Real i.e., Korea Real and Daol Investment go up and down completely randomly.
Pair Corralation between Korea Real and Daol Investment
Assuming the 90 days trading horizon Korea Real Estate is expected to under-perform the Daol Investment. But the stock apears to be less risky and, when comparing its historical volatility, Korea Real Estate is 5.29 times less risky than Daol Investment. The stock trades about -0.02 of its potential returns per unit of risk. The Daol Investment Securities is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 298,619 in Daol Investment Securities on December 30, 2024 and sell it today you would earn a total of 48,381 from holding Daol Investment Securities or generate 16.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Korea Real Estate vs. Daol Investment Securities
Performance |
Timeline |
Korea Real Estate |
Daol Investment Secu |
Korea Real and Daol Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Korea Real and Daol Investment
The main advantage of trading using opposite Korea Real and Daol Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, Daol Investment 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 Daol Investment will offset losses from the drop in Daol Investment's long position.Korea Real vs. DB Insurance Co | Korea Real vs. ECSTELECOM Co | Korea Real vs. BIT Computer Co | Korea Real vs. KT Submarine Telecom |
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Check out your portfolio center.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.
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