Correlation Between Kosdaq Composite and 495330

Can any of the company-specific risk be diversified away by investing in both Kosdaq Composite and 495330 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 495330 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 495330, you can compare the effects of market volatilities on Kosdaq Composite and 495330 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 495330. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kosdaq Composite and 495330.

Diversification Opportunities for Kosdaq Composite and 495330

0.92

Correlation Coefficient

Kosdaq Composite  495330

Almost no diversification

The 3 months correlation between Kosdaq and 495330 is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Kosdaq Composite Index and 495330 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 495330 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 495330. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 495330 has no effect on the direction of Kosdaq Composite i.e., Kosdaq Composite and 495330 go up and down completely randomly.

Pair Corralation between Kosdaq Composite and 495330

Assuming the 90 days trading horizon Kosdaq Composite Index is expected to under-perform the 495330. In addition to that, Kosdaq Composite is 1.57 times more volatile than 495330. It trades about -0.06 of its total potential returns per unit of risk. 495330 is currently generating about 0.01 per unit of volatility. If you would invest  983,584  in 495330 on October 13, 2024 and sell it today you would earn a total of  916.00  from holding 495330 or generate 0.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	33.57%
Values	Daily Returns

Kosdaq Composite Index  vs.  495330

Pair Trading with Kosdaq Composite and 495330

The main advantage of trading using opposite Kosdaq Composite and 495330 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kosdaq Composite position performs unexpectedly, 495330 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 495330 will offset losses from the drop in 495330's long position.

The idea behind Kosdaq Composite Index and 495330 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.