Correlation Between KODEX K and KODEX SP500TR

Can any of the company-specific risk be diversified away by investing in both KODEX K and KODEX SP500TR 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 K and KODEX SP500TR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KODEX K Renewable Energy and KODEX SP500TR, you can compare the effects of market volatilities on KODEX K and KODEX SP500TR 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 K with a short position of KODEX SP500TR. Check out your portfolio center. Please also check ongoing floating volatility patterns of KODEX K and KODEX SP500TR.

Diversification Opportunities for KODEX K and KODEX SP500TR

0.0

Correlation Coefficient

KODEX K  KODEX SP500TR

Pay attention - limited upside

The 3 months correlation between KODEX and KODEX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding KODEX K Renewable Energy and KODEX SP500TR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KODEX SP500TR and KODEX K 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 K Renewable Energy are associated (or correlated) with KODEX SP500TR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KODEX SP500TR has no effect on the direction of KODEX K i.e., KODEX K and KODEX SP500TR go up and down completely randomly.

Pair Corralation between KODEX K and KODEX SP500TR

If you would invest  0.00  in KODEX K Renewable Energy on December 22, 2024 and sell it today you would earn a total of  0.00  from holding KODEX K Renewable Energy or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.75%
Values	Daily Returns

KODEX K Renewable Energy  vs.  KODEX SP500TR

KODEX K Renewable

Risk-Adjusted Performance

Insignificant

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

KODEX SP500TR

Risk-Adjusted Performance

Very Weak

Over the last 90 days KODEX SP500TR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KODEX SP500TR 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 K and KODEX SP500TR

The main advantage of trading using opposite KODEX K and KODEX SP500TR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KODEX K position performs unexpectedly, KODEX SP500TR 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 SP500TR will offset losses from the drop in KODEX SP500TR's long position.

The idea behind KODEX K Renewable Energy and KODEX SP500TR 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.