Correlation Between Korea Computer and MediaZen

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

By analyzing existing cross correlation between Korea Computer and MediaZen, you can compare the effects of market volatilities on Korea Computer and MediaZen 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 MediaZen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Computer and MediaZen.

Diversification Opportunities for Korea Computer and MediaZen

-0.34

Correlation Coefficient

Korea Computer  MediaZen

Very good diversification

The 3 months correlation between Korea and MediaZen is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Korea Computer and MediaZen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaZen 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 MediaZen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MediaZen has no effect on the direction of Korea Computer i.e., Korea Computer and MediaZen go up and down completely randomly.

Pair Corralation between Korea Computer and MediaZen

Assuming the 90 days trading horizon Korea Computer is expected to under-perform the MediaZen. In addition to that, Korea Computer is 2.33 times more volatile than MediaZen. It trades about -0.01 of its total potential returns per unit of risk. MediaZen is currently generating about 0.22 per unit of volatility. If you would invest  966,000  in MediaZen on September 21, 2024 and sell it today you would earn a total of  164,000  from holding MediaZen or generate 16.98% return on investment over 90 days.

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

Korea Computer  vs.  MediaZen

Korea Computer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Korea Computer has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Korea Computer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

MediaZen

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MediaZen are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MediaZen sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Korea Computer and MediaZen

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

The idea behind Korea Computer and MediaZen 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 Commodity Directory module to find actively traded commodities issued by global exchanges.