Correlation Between Korea Real and Simmtech Holdings

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

Diversification Opportunities for Korea Real and Simmtech Holdings

0.55

Correlation Coefficient

Korea Real  Simmtech Holdings

Very weak diversification

The 3 months correlation between Korea and Simmtech is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and Simmtech Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simmtech Holdings 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 Simmtech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simmtech Holdings has no effect on the direction of Korea Real i.e., Korea Real and Simmtech Holdings go up and down completely randomly.

Pair Corralation between Korea Real and Simmtech Holdings

Assuming the 90 days trading horizon Korea Real Estate is expected to generate 0.27 times more return on investment than Simmtech Holdings. However, Korea Real Estate is 3.67 times less risky than Simmtech Holdings. It trades about -0.09 of its potential returns per unit of risk. Simmtech Holdings Co is currently generating about -0.11 per unit of risk. If you would invest  104,000  in Korea Real Estate on October 26, 2024 and sell it today you would lose (4,600) from holding Korea Real Estate or give up 4.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Korea Real Estate  vs.  Simmtech Holdings Co

Korea Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Korea Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Korea Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Simmtech Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simmtech Holdings Co 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Korea Real and Simmtech Holdings

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

The idea behind Korea Real Estate and Simmtech Holdings Co 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.