Correlation Between Korea Information and ASTORY CoLtd

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

By analyzing existing cross correlation between Korea Information Engineering and ASTORY CoLtd, you can compare the effects of market volatilities on Korea Information and ASTORY CoLtd 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 Korea Information with a short position of ASTORY CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and ASTORY CoLtd.

Diversification Opportunities for Korea Information and ASTORY CoLtd

-0.03

Correlation Coefficient

Korea Information  ASTORY CoLtd

Good diversification

The 3 months correlation between Korea and ASTORY is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Engineering and ASTORY CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASTORY CoLtd and Korea Information 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 Korea Information Engineering are associated (or correlated) with ASTORY CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASTORY CoLtd has no effect on the direction of Korea Information i.e., Korea Information and ASTORY CoLtd go up and down completely randomly.

Pair Corralation between Korea Information and ASTORY CoLtd

Assuming the 90 days trading horizon Korea Information Engineering is expected to under-perform the ASTORY CoLtd. But the stock apears to be less risky and, when comparing its historical volatility, Korea Information Engineering is 1.73 times less risky than ASTORY CoLtd. The stock trades about -0.14 of its potential returns per unit of risk. The ASTORY CoLtd is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  666,000  in ASTORY CoLtd on September 4, 2024 and sell it today you would earn a total of  150,000  from holding ASTORY CoLtd or generate 22.52% return on investment over 90 days.

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

Korea Information Engineering  vs.  ASTORY CoLtd

Korea Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Korea Information Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

ASTORY CoLtd

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ASTORY CoLtd are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ASTORY CoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Korea Information and ASTORY CoLtd

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

The idea behind Korea Information Engineering and ASTORY CoLtd 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.