Correlation Between EBEST Investment and Korean Reinsurance

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

By analyzing existing cross correlation between EBEST Investment Securities and Korean Reinsurance Co, you can compare the effects of market volatilities on EBEST Investment and Korean Reinsurance 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 EBEST Investment with a short position of Korean Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBEST Investment and Korean Reinsurance.

Diversification Opportunities for EBEST Investment and Korean Reinsurance

-0.64

Correlation Coefficient

EBEST Investment  Korean Reinsurance

Excellent diversification

The 3 months correlation between EBEST and Korean is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding EBEST Investment Securities and Korean Reinsurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Reinsurance and EBEST 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 EBEST Investment Securities are associated (or correlated) with Korean Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Reinsurance has no effect on the direction of EBEST Investment i.e., EBEST Investment and Korean Reinsurance go up and down completely randomly.

Pair Corralation between EBEST Investment and Korean Reinsurance

Assuming the 90 days trading horizon EBEST Investment Securities is expected to under-perform the Korean Reinsurance. But the stock apears to be less risky and, when comparing its historical volatility, EBEST Investment Securities is 1.08 times less risky than Korean Reinsurance. The stock trades about -0.19 of its potential returns per unit of risk. The Korean Reinsurance Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  735,833  in Korean Reinsurance Co on September 2, 2024 and sell it today you would earn a total of  75,167  from holding Korean Reinsurance Co or generate 10.22% return on investment over 90 days.

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

EBEST Investment Securities  vs.  Korean Reinsurance Co

EBEST Investment Sec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EBEST Investment Securities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Korean Reinsurance

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Korean Reinsurance Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Korean Reinsurance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with EBEST Investment and Korean Reinsurance

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

The idea behind EBEST Investment Securities and Korean Reinsurance 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.