Correlation Between Korea New and Orbitech

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

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

Diversification Opportunities for Korea New and Orbitech

0.04

Correlation Coefficient

Korea New  Orbitech

Significant diversification

The 3 months correlation between Korea and Orbitech is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Korea New Network and Orbitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbitech and Korea New 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 New Network are associated (or correlated) with Orbitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbitech has no effect on the direction of Korea New i.e., Korea New and Orbitech go up and down completely randomly.

Pair Corralation between Korea New and Orbitech

Assuming the 90 days trading horizon Korea New Network is expected to generate 0.63 times more return on investment than Orbitech. However, Korea New Network is 1.6 times less risky than Orbitech. It trades about 0.02 of its potential returns per unit of risk. Orbitech Co is currently generating about -0.01 per unit of risk. If you would invest  76,500  in Korea New Network on September 3, 2024 and sell it today you would earn a total of  600.00  from holding Korea New Network or generate 0.78% return on investment over 90 days.

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

Korea New Network  vs.  Orbitech Co

Korea New Network

Risk-Adjusted Performance

1 of 100

Weak

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

Orbitech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Korea New and Orbitech

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

The idea behind Korea New Network and Orbitech 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.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.