Correlation Between THiRA-UTECH and Kakao Games

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

By analyzing existing cross correlation between THiRA UTECH LTD and Kakao Games Corp, you can compare the effects of market volatilities on THiRA-UTECH and Kakao Games 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 THiRA-UTECH with a short position of Kakao Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of THiRA-UTECH and Kakao Games.

Diversification Opportunities for THiRA-UTECH and Kakao Games

-0.02

Correlation Coefficient

THiRA-UTECH  Kakao Games

Good diversification

The 3 months correlation between THiRA-UTECH and Kakao is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding THiRA UTECH LTD and Kakao Games Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kakao Games Corp and THiRA-UTECH 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 THiRA UTECH LTD are associated (or correlated) with Kakao Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kakao Games Corp has no effect on the direction of THiRA-UTECH i.e., THiRA-UTECH and Kakao Games go up and down completely randomly.

Pair Corralation between THiRA-UTECH and Kakao Games

Assuming the 90 days trading horizon THiRA UTECH LTD is expected to under-perform the Kakao Games. In addition to that, THiRA-UTECH is 1.06 times more volatile than Kakao Games Corp. It trades about -0.03 of its total potential returns per unit of risk. Kakao Games Corp is currently generating about 0.04 per unit of volatility. If you would invest  1,693,000  in Kakao Games Corp on September 14, 2024 and sell it today you would earn a total of  74,000  from holding Kakao Games Corp or generate 4.37% return on investment over 90 days.

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

THiRA UTECH LTD  vs.  Kakao Games Corp

THiRA UTECH LTD

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kakao Games Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kakao Games Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kakao Games may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with THiRA-UTECH and Kakao Games

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

The idea behind THiRA UTECH LTD and Kakao Games 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.