Correlation Between Korea Computer and Digital Imaging
Can any of the company-specific risk be diversified away by investing in both Korea Computer and Digital Imaging 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 Computer and Digital Imaging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Computer and Digital Imaging Technology, you can compare the effects of market volatilities on Korea Computer and Digital Imaging 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 Computer with a short position of Digital Imaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Computer and Digital Imaging.
Diversification Opportunities for Korea Computer and Digital Imaging
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Digital is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Korea Computer and Digital Imaging Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Imaging Tech and Korea Computer 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 Computer are associated (or correlated) with Digital Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Imaging Tech has no effect on the direction of Korea Computer i.e., Korea Computer and Digital Imaging go up and down completely randomly.
Pair Corralation between Korea Computer and Digital Imaging
Assuming the 90 days trading horizon Korea Computer is expected to generate 0.73 times more return on investment than Digital Imaging. However, Korea Computer is 1.37 times less risky than Digital Imaging. It trades about -0.02 of its potential returns per unit of risk. Digital Imaging Technology is currently generating about -0.07 per unit of risk. If you would invest 560,000 in Korea Computer on September 26, 2024 and sell it today you would lose (28,000) from holding Korea Computer or give up 5.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Korea Computer vs. Digital Imaging Technology
Performance |
Timeline |
Korea Computer |
Digital Imaging Tech |
Korea Computer and Digital Imaging Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Korea Computer and Digital Imaging
The main advantage of trading using opposite Korea Computer and Digital Imaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Computer position performs unexpectedly, Digital Imaging 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 Digital Imaging will offset losses from the drop in Digital Imaging's long position.Korea Computer vs. Dongsin Engineering Construction | Korea Computer vs. Doosan Fuel Cell | Korea Computer vs. Daishin Balance 1 | Korea Computer vs. Total Soft Bank |
Digital Imaging vs. Daishin Information Communications | Digital Imaging vs. Mobile Appliance | Digital Imaging vs. Korean Reinsurance Co | Digital Imaging vs. SK Chemicals Co |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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