Correlation Between Korea Information and Moadata

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

By analyzing existing cross correlation between Korea Information Engineering and Moadata Co, you can compare the effects of market volatilities on Korea Information and Moadata 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 Moadata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Moadata.

Diversification Opportunities for Korea Information and Moadata

-0.53

Correlation Coefficient

Korea Information  Moadata

Excellent diversification

The 3 months correlation between Korea and Moadata is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Engineering and Moadata Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moadata 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 Engineering are associated (or correlated) with Moadata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moadata has no effect on the direction of Korea Information i.e., Korea Information and Moadata go up and down completely randomly.

Pair Corralation between Korea Information and Moadata

Assuming the 90 days trading horizon Korea Information Engineering is expected to generate 0.62 times more return on investment than Moadata. However, Korea Information Engineering is 1.6 times less risky than Moadata. It trades about 0.11 of its potential returns per unit of risk. Moadata Co is currently generating about -0.13 per unit of risk. If you would invest  239,000  in Korea Information Engineering on December 29, 2024 and sell it today you would earn a total of  27,000  from holding Korea Information Engineering or generate 11.3% return on investment over 90 days.

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

Korea Information Engineering  vs.  Moadata Co

Korea Information

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Information Engineering are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Korea Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Moadata

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Korea Information and Moadata

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

The idea behind Korea Information Engineering and Moadata 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.