Correlation Between Kosdaq Composite and Infinitt Healthcare

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

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

Diversification Opportunities for Kosdaq Composite and Infinitt Healthcare

-0.09

Correlation Coefficient

Kosdaq Composite  Infinitt Healthcare

Good diversification

The 3 months correlation between Kosdaq and Infinitt is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Kosdaq Composite Index and Infinitt Healthcare Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infinitt Healthcare and Kosdaq Composite 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 Kosdaq Composite Index are associated (or correlated) with Infinitt Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infinitt Healthcare has no effect on the direction of Kosdaq Composite i.e., Kosdaq Composite and Infinitt Healthcare go up and down completely randomly.

Pair Corralation between Kosdaq Composite and Infinitt Healthcare

Assuming the 90 days trading horizon Kosdaq Composite Index is expected to under-perform the Infinitt Healthcare. But the index apears to be less risky and, when comparing its historical volatility, Kosdaq Composite Index is 1.19 times less risky than Infinitt Healthcare. The index trades about -0.12 of its potential returns per unit of risk. The Infinitt Healthcare Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  444,500  in Infinitt Healthcare Co on September 3, 2024 and sell it today you would earn a total of  5,500  from holding Infinitt Healthcare Co or generate 1.24% return on investment over 90 days.

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

Kosdaq Composite Index  vs.  Infinitt Healthcare Co

Pair Trading with Kosdaq Composite and Infinitt Healthcare

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

The idea behind Kosdaq Composite Index and Infinitt Healthcare 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.