Correlation Between Mirae Asset and RedcapTour

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

By analyzing existing cross correlation between Mirae Asset Daewoo and RedcapTour Co, you can compare the effects of market volatilities on Mirae Asset and RedcapTour 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 Mirae Asset with a short position of RedcapTour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mirae Asset and RedcapTour.

Diversification Opportunities for Mirae Asset and RedcapTour

0.56

Correlation Coefficient

Mirae Asset  RedcapTour

Very weak diversification

The 3 months correlation between Mirae and RedcapTour is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Mirae Asset Daewoo and RedcapTour Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RedcapTour and Mirae Asset 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 Mirae Asset Daewoo are associated (or correlated) with RedcapTour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RedcapTour has no effect on the direction of Mirae Asset i.e., Mirae Asset and RedcapTour go up and down completely randomly.

Pair Corralation between Mirae Asset and RedcapTour

Assuming the 90 days trading horizon Mirae Asset is expected to generate 1.08 times less return on investment than RedcapTour. In addition to that, Mirae Asset is 2.56 times more volatile than RedcapTour Co. It trades about 0.03 of its total potential returns per unit of risk. RedcapTour Co is currently generating about 0.08 per unit of volatility. If you would invest  794,500  in RedcapTour Co on September 29, 2024 and sell it today you would earn a total of  62,500  from holding RedcapTour Co or generate 7.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Mirae Asset Daewoo  vs.  RedcapTour Co

Mirae Asset Daewoo

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mirae Asset Daewoo are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mirae Asset may actually be approaching a critical reversion point that can send shares even higher in January 2025.

RedcapTour

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RedcapTour Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, RedcapTour may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mirae Asset and RedcapTour

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

The idea behind Mirae Asset Daewoo and RedcapTour 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.