Correlation Between Kosdaq Composite and 475050

Can any of the company-specific risk be diversified away by investing in both Kosdaq Composite and 475050 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 475050 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 475050, you can compare the effects of market volatilities on Kosdaq Composite and 475050 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 475050. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kosdaq Composite and 475050.

Diversification Opportunities for Kosdaq Composite and 475050

-0.81

Correlation Coefficient

Kosdaq Composite  475050

Pay attention - limited upside

The 3 months correlation between Kosdaq and 475050 is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Kosdaq Composite Index and 475050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 475050 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 475050. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 475050 has no effect on the direction of Kosdaq Composite i.e., Kosdaq Composite and 475050 go up and down completely randomly.

Pair Corralation between Kosdaq Composite and 475050

Assuming the 90 days trading horizon Kosdaq Composite Index is expected to generate about the same return on investment as 475050. But, Kosdaq Composite Index is 1.17 times less risky than 475050. It trades about -0.04 of its potential returns per unit of risk. 475050 is currently generating about -0.04 per unit of risk. If you would invest  852,000  in 475050 on September 25, 2024 and sell it today you would lose (23,000) from holding 475050 or give up 2.7% of portfolio value over 90 days.

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

Kosdaq Composite Index  vs.  475050

Pair Trading with Kosdaq Composite and 475050

The main advantage of trading using opposite Kosdaq Composite and 475050 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kosdaq Composite position performs unexpectedly, 475050 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 475050 will offset losses from the drop in 475050's long position.

The idea behind Kosdaq Composite Index and 475050 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.