Correlation Between Microfriend and Tae Kwang

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

By analyzing existing cross correlation between Microfriend and Tae Kwang, you can compare the effects of market volatilities on Microfriend and Tae Kwang 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 Microfriend with a short position of Tae Kwang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microfriend and Tae Kwang.

Diversification Opportunities for Microfriend and Tae Kwang

0.0

Correlation Coefficient

Microfriend  Tae Kwang

Pay attention - limited upside

The 3 months correlation between Microfriend and Tae is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microfriend and Tae Kwang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tae Kwang and Microfriend 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 Microfriend are associated (or correlated) with Tae Kwang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tae Kwang has no effect on the direction of Microfriend i.e., Microfriend and Tae Kwang go up and down completely randomly.

Pair Corralation between Microfriend and Tae Kwang

If you would invest  274,500  in Microfriend on December 26, 2024 and sell it today you would earn a total of  2,500  from holding Microfriend or generate 0.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Microfriend  vs.  Tae Kwang

Microfriend

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microfriend are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Microfriend is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tae Kwang

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Microfriend and Tae Kwang

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

The idea behind Microfriend and Tae Kwang 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.