Correlation Between Korea Investment and EV Advanced
Can any of the company-specific risk be diversified away by investing in both Korea Investment and EV Advanced 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 Investment and EV Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Investment Holdings and EV Advanced Material, you can compare the effects of market volatilities on Korea Investment and EV Advanced 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 Investment with a short position of EV Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Investment and EV Advanced.
Diversification Opportunities for Korea Investment and EV Advanced
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and 131400 is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Korea Investment Holdings and EV Advanced Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EV Advanced Material and Korea Investment 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 Investment Holdings are associated (or correlated) with EV Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EV Advanced Material has no effect on the direction of Korea Investment i.e., Korea Investment and EV Advanced go up and down completely randomly.
Pair Corralation between Korea Investment and EV Advanced
Assuming the 90 days trading horizon Korea Investment Holdings is expected to generate 0.35 times more return on investment than EV Advanced. However, Korea Investment Holdings is 2.83 times less risky than EV Advanced. It trades about 0.07 of its potential returns per unit of risk. EV Advanced Material is currently generating about -0.03 per unit of risk. If you would invest 4,695,000 in Korea Investment Holdings on September 27, 2024 and sell it today you would earn a total of 595,000 from holding Korea Investment Holdings or generate 12.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Korea Investment Holdings vs. EV Advanced Material
Performance |
Timeline |
Korea Investment Holdings |
EV Advanced Material |
Korea Investment and EV Advanced Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Korea Investment and EV Advanced
The main advantage of trading using opposite Korea Investment and EV Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Investment position performs unexpectedly, EV Advanced 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 EV Advanced will offset losses from the drop in EV Advanced's long position.Korea Investment vs. Hyunwoo Industrial Co | Korea Investment vs. Kumho Industrial Co | Korea Investment vs. Namhwa Industrial Co | Korea Investment vs. iNtRON Biotechnology |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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