Correlation Between Korea Closed and Hunter Small

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

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

Diversification Opportunities for Korea Closed and Hunter Small

-0.59

Correlation Coefficient

Korea Closed  Hunter Small

Excellent diversification

The 3 months correlation between Korea and Hunter is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Korea Closed and Hunter Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunter Small Cap and Korea Closed 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 Korea Closed are associated (or correlated) with Hunter Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunter Small Cap has no effect on the direction of Korea Closed i.e., Korea Closed and Hunter Small go up and down completely randomly.

Pair Corralation between Korea Closed and Hunter Small

Allowing for the 90-day total investment horizon Korea Closed is expected to under-perform the Hunter Small. In addition to that, Korea Closed is 1.25 times more volatile than Hunter Small Cap. It trades about -0.2 of its total potential returns per unit of risk. Hunter Small Cap is currently generating about -0.03 per unit of volatility. If you would invest  1,277  in Hunter Small Cap on September 24, 2024 and sell it today you would lose (34.00) from holding Hunter Small Cap or give up 2.66% of portfolio value over 90 days.

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

Korea Closed  vs.  Hunter Small Cap

Korea Closed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Korea Closed has generated negative risk-adjusted returns adding no value to fund investors. Despite uncertain performance in the last few months, the Fund's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the mutual fund stockholders.

Hunter Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hunter Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Hunter Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Korea Closed and Hunter Small

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

The idea behind Korea Closed and Hunter Small Cap 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.