Correlation Between KakaoBank Corp and SIMMTECH

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

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

Diversification Opportunities for KakaoBank Corp and SIMMTECH

-0.05

Correlation Coefficient

KakaoBank Corp  SIMMTECH

Good diversification

The 3 months correlation between KakaoBank and SIMMTECH is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding KakaoBank Corp and SIMMTECH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMMTECH and KakaoBank Corp 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 KakaoBank Corp are associated (or correlated) with SIMMTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMMTECH has no effect on the direction of KakaoBank Corp i.e., KakaoBank Corp and SIMMTECH go up and down completely randomly.

Pair Corralation between KakaoBank Corp and SIMMTECH

Assuming the 90 days trading horizon KakaoBank Corp is expected to under-perform the SIMMTECH. But the stock apears to be less risky and, when comparing its historical volatility, KakaoBank Corp is 2.23 times less risky than SIMMTECH. The stock trades about -0.36 of its potential returns per unit of risk. The SIMMTECH Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,157,000  in SIMMTECH Co on October 22, 2024 and sell it today you would earn a total of  34,000  from holding SIMMTECH Co or generate 2.94% return on investment over 90 days.

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

KakaoBank Corp  vs.  SIMMTECH Co

KakaoBank Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

SIMMTECH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIMMTECH 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 KakaoBank Corp and SIMMTECH

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

The idea behind KakaoBank Corp and SIMMTECH 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.