Correlation Between Ecoplastic and Kakao Games

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

By analyzing existing cross correlation between Ecoplastic and Kakao Games Corp, you can compare the effects of market volatilities on Ecoplastic and Kakao Games 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 Ecoplastic with a short position of Kakao Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecoplastic and Kakao Games.

Diversification Opportunities for Ecoplastic and Kakao Games

0.57

Correlation Coefficient

Ecoplastic  Kakao Games

Very weak diversification

The 3 months correlation between Ecoplastic and Kakao is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ecoplastic and Kakao Games Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kakao Games Corp and Ecoplastic 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 Ecoplastic are associated (or correlated) with Kakao Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kakao Games Corp has no effect on the direction of Ecoplastic i.e., Ecoplastic and Kakao Games go up and down completely randomly.

Pair Corralation between Ecoplastic and Kakao Games

Assuming the 90 days trading horizon Ecoplastic is expected to under-perform the Kakao Games. But the stock apears to be less risky and, when comparing its historical volatility, Ecoplastic is 1.33 times less risky than Kakao Games. The stock trades about -0.26 of its potential returns per unit of risk. The Kakao Games Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,813,000  in Kakao Games Corp on September 1, 2024 and sell it today you would earn a total of  2,000  from holding Kakao Games Corp or generate 0.11% return on investment over 90 days.

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

Ecoplastic  vs.  Kakao Games Corp

Ecoplastic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecoplastic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Kakao Games Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kakao Games Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Kakao Games is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ecoplastic and Kakao Games

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

The idea behind Ecoplastic and Kakao Games Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.