Correlation Between ASTORY CoLtd and Cafe24 Corp

Can any of the company-specific risk be diversified away by investing in both ASTORY CoLtd and Cafe24 Corp 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 ASTORY CoLtd and Cafe24 Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ASTORY CoLtd and Cafe24 Corp, you can compare the effects of market volatilities on ASTORY CoLtd and Cafe24 Corp 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 ASTORY CoLtd with a short position of Cafe24 Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASTORY CoLtd and Cafe24 Corp.

Diversification Opportunities for ASTORY CoLtd and Cafe24 Corp

0.7

Correlation Coefficient

ASTORY CoLtd  Cafe24 Corp

Poor diversification

The 3 months correlation between ASTORY and Cafe24 is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding ASTORY CoLtd and Cafe24 Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cafe24 Corp and ASTORY CoLtd 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 ASTORY CoLtd are associated (or correlated) with Cafe24 Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cafe24 Corp has no effect on the direction of ASTORY CoLtd i.e., ASTORY CoLtd and Cafe24 Corp go up and down completely randomly.

Pair Corralation between ASTORY CoLtd and Cafe24 Corp

Assuming the 90 days trading horizon ASTORY CoLtd is expected to generate 1.08 times less return on investment than Cafe24 Corp. But when comparing it to its historical volatility, ASTORY CoLtd is 1.38 times less risky than Cafe24 Corp. It trades about 0.13 of its potential returns per unit of risk. Cafe24 Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,020,000  in Cafe24 Corp on September 16, 2024 and sell it today you would earn a total of  730,000  from holding Cafe24 Corp or generate 24.17% return on investment over 90 days.

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

ASTORY CoLtd  vs.  Cafe24 Corp

ASTORY CoLtd

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASTORY CoLtd are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ASTORY CoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

Cafe24 Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cafe24 Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cafe24 Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASTORY CoLtd and Cafe24 Corp

The main advantage of trading using opposite ASTORY CoLtd and Cafe24 Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASTORY CoLtd position performs unexpectedly, Cafe24 Corp 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 Cafe24 Corp will offset losses from the drop in Cafe24 Corp's long position.

The idea behind ASTORY CoLtd and Cafe24 Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..