Correlation Between KODEX KRX and KODEX 200LONGKOSDAQ150

Can any of the company-specific risk be diversified away by investing in both KODEX KRX 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 KRX 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 KRX Climate and KODEX 200LONGKOSDAQ150SHORT Futures, you can compare the effects of market volatilities on KODEX KRX 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 KRX with a short position of KODEX 200LONGKOSDAQ150. Check out your portfolio center. Please also check ongoing floating volatility patterns of KODEX KRX and KODEX 200LONGKOSDAQ150.

Diversification Opportunities for KODEX KRX and KODEX 200LONGKOSDAQ150

-0.71

Correlation Coefficient

KODEX KRX  KODEX 200LONGKOSDAQ150

Pay attention - limited upside

The 3 months correlation between KODEX and KODEX is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding KODEX KRX Climate 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 KRX 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 KRX Climate 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 KRX i.e., KODEX KRX and KODEX 200LONGKOSDAQ150 go up and down completely randomly.

Pair Corralation between KODEX KRX and KODEX 200LONGKOSDAQ150

Assuming the 90 days trading horizon KODEX KRX Climate is expected to under-perform the KODEX 200LONGKOSDAQ150. In addition to that, KODEX KRX is 1.55 times more volatile than KODEX 200LONGKOSDAQ150SHORT Futures. It trades about -0.07 of its total potential returns per unit of risk. KODEX 200LONGKOSDAQ150SHORT Futures is currently generating about 0.03 per unit of volatility. If you would invest  866,000  in KODEX 200LONGKOSDAQ150SHORT Futures on October 12, 2024 and sell it today you would earn a total of  36,500  from holding KODEX 200LONGKOSDAQ150SHORT Futures or generate 4.21% return on investment over 90 days.

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

KODEX KRX Climate  vs.  KODEX 200LONGKOSDAQ150SHORT Fu

KODEX KRX Climate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KODEX KRX Climate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf'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 ETF investors.

KODEX 200LONGKOSDAQ150

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KODEX 200LONGKOSDAQ150SHORT Futures are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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 KRX and KODEX 200LONGKOSDAQ150

The main advantage of trading using opposite KODEX KRX and KODEX 200LONGKOSDAQ150 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KODEX KRX 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 KRX Climate 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.