Correlation Between Kosdaq Composite and RaemongRaein

Can any of the company-specific risk be diversified away by investing in both Kosdaq Composite and RaemongRaein 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 RaemongRaein 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 RaemongRaein Co, you can compare the effects of market volatilities on Kosdaq Composite and RaemongRaein 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 RaemongRaein. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kosdaq Composite and RaemongRaein.

Diversification Opportunities for Kosdaq Composite and RaemongRaein

-0.42

Correlation Coefficient

Kosdaq Composite  RaemongRaein

Very good diversification

The 3 months correlation between Kosdaq and RaemongRaein is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Kosdaq Composite Index and RaemongRaein Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RaemongRaein 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 RaemongRaein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RaemongRaein has no effect on the direction of Kosdaq Composite i.e., Kosdaq Composite and RaemongRaein go up and down completely randomly.

Pair Corralation between Kosdaq Composite and RaemongRaein

Assuming the 90 days trading horizon Kosdaq Composite Index is expected to generate 0.12 times more return on investment than RaemongRaein. However, Kosdaq Composite Index is 8.61 times less risky than RaemongRaein. It trades about 0.27 of its potential returns per unit of risk. RaemongRaein Co is currently generating about -0.03 per unit of risk. If you would invest  67,592  in Kosdaq Composite Index on October 12, 2024 and sell it today you would earn a total of  4,760  from holding Kosdaq Composite Index or generate 7.04% return on investment over 90 days.

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

Kosdaq Composite Index  vs.  RaemongRaein Co

Pair Trading with Kosdaq Composite and RaemongRaein

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

The idea behind Kosdaq Composite Index and RaemongRaein 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.