Correlation Between Grand Korea and KB No2
Can any of the company-specific risk be diversified away by investing in both Grand Korea and KB No2 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 KB No2 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 KB No2 Special, you can compare the effects of market volatilities on Grand Korea and KB No2 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 KB No2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Korea and KB No2.
Diversification Opportunities for Grand Korea and KB No2
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grand and 192250 is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Grand Korea Leisure and KB No2 Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB No2 Special 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 KB No2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB No2 Special has no effect on the direction of Grand Korea i.e., Grand Korea and KB No2 go up and down completely randomly.
Pair Corralation between Grand Korea and KB No2
Assuming the 90 days trading horizon Grand Korea Leisure is expected to under-perform the KB No2. But the stock apears to be less risky and, when comparing its historical volatility, Grand Korea Leisure is 1.75 times less risky than KB No2. The stock trades about -0.01 of its potential returns per unit of risk. The KB No2 Special is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 800,000 in KB No2 Special on September 25, 2024 and sell it today you would lose (5,000) from holding KB No2 Special or give up 0.62% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Grand Korea Leisure vs. KB No2 Special
Performance |
Timeline |
Grand Korea Leisure |
KB No2 Special |
Grand Korea and KB No2 Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Grand Korea and KB No2
The main advantage of trading using opposite Grand Korea and KB No2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Korea position performs unexpectedly, KB No2 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 KB No2 will offset losses from the drop in KB No2's long position.Grand Korea vs. SOOSAN INT Co | Grand Korea vs. Humasis Co | Grand Korea vs. Gyeongnam Steel Co | Grand Korea vs. Doosan Bobcat |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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