Correlation Between Koh Young and Korea New

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

By analyzing existing cross correlation between Koh Young Technology and Korea New Network, you can compare the effects of market volatilities on Koh Young and Korea New 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 Koh Young with a short position of Korea New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koh Young and Korea New.

Diversification Opportunities for Koh Young and Korea New

-0.32

Correlation Coefficient

Koh Young  Korea New

Very good diversification

The 3 months correlation between Koh and Korea is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Koh Young Technology and Korea New Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea New Network and Koh Young 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 Koh Young Technology are associated (or correlated) with Korea New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea New Network has no effect on the direction of Koh Young i.e., Koh Young and Korea New go up and down completely randomly.

Pair Corralation between Koh Young and Korea New

Assuming the 90 days trading horizon Koh Young Technology is expected to generate 5.46 times more return on investment than Korea New. However, Koh Young is 5.46 times more volatile than Korea New Network. It trades about 0.16 of its potential returns per unit of risk. Korea New Network is currently generating about -0.1 per unit of risk. If you would invest  880,309  in Koh Young Technology on December 31, 2024 and sell it today you would earn a total of  519,691  from holding Koh Young Technology or generate 59.04% return on investment over 90 days.

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

Koh Young Technology  vs.  Korea New Network

Koh Young Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Koh Young Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Koh Young sustained solid returns over the last few months and may actually be approaching a breakup point.

Korea New Network

Risk-Adjusted Performance

Very Weak

Over the last 90 days Korea New Network has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Koh Young and Korea New

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

The idea behind Koh Young Technology and Korea New Network 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.