Correlation Between Grand Korea and Okins Electronics

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

By analyzing existing cross correlation between Grand Korea Leisure and Okins Electronics Co, you can compare the effects of market volatilities on Grand Korea and Okins Electronics 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 Grand Korea with a short position of Okins Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Korea and Okins Electronics.

Diversification Opportunities for Grand Korea and Okins Electronics

0.21

Correlation Coefficient

Grand Korea  Okins Electronics

Modest diversification

The 3 months correlation between Grand and Okins is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Grand Korea Leisure and Okins Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Okins Electronics and Grand Korea 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 Grand Korea Leisure are associated (or correlated) with Okins Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Okins Electronics has no effect on the direction of Grand Korea i.e., Grand Korea and Okins Electronics go up and down completely randomly.

Pair Corralation between Grand Korea and Okins Electronics

Assuming the 90 days trading horizon Grand Korea is expected to generate 3.52 times less return on investment than Okins Electronics. But when comparing it to its historical volatility, Grand Korea Leisure is 2.42 times less risky than Okins Electronics. It trades about 0.32 of its potential returns per unit of risk. Okins Electronics Co is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest  368,500  in Okins Electronics Co on October 10, 2024 and sell it today you would earn a total of  129,500  from holding Okins Electronics Co or generate 35.14% return on investment over 90 days.

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

Grand Korea Leisure  vs.  Okins Electronics Co

Grand Korea Leisure

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Korea Leisure are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Grand Korea is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Okins Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Okins Electronics 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 Grand Korea and Okins Electronics

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

The idea behind Grand Korea Leisure and Okins Electronics 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.