Correlation Between KODEX KOSPI and KODEX 200LONGKOSDAQ150

Can any of the company-specific risk be diversified away by investing in both KODEX KOSPI and KODEX 200LONGKOSDAQ150 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 KODEX KOSPI and KODEX 200LONGKOSDAQ150 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KODEX KOSPI LargeCap and KODEX 200LONGKOSDAQ150SHORT Futures, you can compare the effects of market volatilities on KODEX KOSPI and KODEX 200LONGKOSDAQ150 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 KODEX KOSPI with a short position of KODEX 200LONGKOSDAQ150. Check out your portfolio center. Please also check ongoing floating volatility patterns of KODEX KOSPI and KODEX 200LONGKOSDAQ150.

Diversification Opportunities for KODEX KOSPI and KODEX 200LONGKOSDAQ150

-0.4

Correlation Coefficient

KODEX KOSPI  KODEX 200LONGKOSDAQ150

Very good diversification

The 3 months correlation between KODEX and KODEX is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding KODEX KOSPI LargeCap and KODEX 200LONGKOSDAQ150SHORT Fu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KODEX 200LONGKOSDAQ150 and KODEX KOSPI 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 KODEX KOSPI LargeCap are associated (or correlated) with KODEX 200LONGKOSDAQ150. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KODEX 200LONGKOSDAQ150 has no effect on the direction of KODEX KOSPI i.e., KODEX KOSPI and KODEX 200LONGKOSDAQ150 go up and down completely randomly.

Pair Corralation between KODEX KOSPI and KODEX 200LONGKOSDAQ150

Assuming the 90 days trading horizon KODEX KOSPI LargeCap is expected to under-perform the KODEX 200LONGKOSDAQ150. But the etf apears to be less risky and, when comparing its historical volatility, KODEX KOSPI LargeCap is 1.13 times less risky than KODEX 200LONGKOSDAQ150. The etf trades about -0.02 of its potential returns per unit of risk. The KODEX 200LONGKOSDAQ150SHORT Futures is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  900,500  in KODEX 200LONGKOSDAQ150SHORT Futures on October 24, 2024 and sell it today you would lose (6,500) from holding KODEX 200LONGKOSDAQ150SHORT Futures or give up 0.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

KODEX KOSPI LargeCap  vs.  KODEX 200LONGKOSDAQ150SHORT Fu

KODEX KOSPI LargeCap

Risk-Adjusted Performance

0 of 100

Very Weak

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

KODEX 200LONGKOSDAQ150

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KODEX 200LONGKOSDAQ150SHORT Futures has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KODEX 200LONGKOSDAQ150 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KODEX KOSPI and KODEX 200LONGKOSDAQ150

The main advantage of trading using opposite KODEX KOSPI and KODEX 200LONGKOSDAQ150 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KODEX KOSPI position performs unexpectedly, KODEX 200LONGKOSDAQ150 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 KODEX 200LONGKOSDAQ150 will offset losses from the drop in KODEX 200LONGKOSDAQ150's long position.

The idea behind KODEX KOSPI LargeCap and KODEX 200LONGKOSDAQ150SHORT Futures 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.