Correlation Between KakaoBank Corp and DYPNF CoLtd
Can any of the company-specific risk be diversified away by investing in both KakaoBank Corp and DYPNF CoLtd 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 KakaoBank Corp and DYPNF CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KakaoBank Corp and DYPNF CoLtd, you can compare the effects of market volatilities on KakaoBank Corp and DYPNF CoLtd 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 KakaoBank Corp with a short position of DYPNF CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of KakaoBank Corp and DYPNF CoLtd.
Diversification Opportunities for KakaoBank Corp and DYPNF CoLtd
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between KakaoBank and DYPNF is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding KakaoBank Corp and DYPNF CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DYPNF CoLtd and KakaoBank Corp 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 KakaoBank Corp are associated (or correlated) with DYPNF CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DYPNF CoLtd has no effect on the direction of KakaoBank Corp i.e., KakaoBank Corp and DYPNF CoLtd go up and down completely randomly.
Pair Corralation between KakaoBank Corp and DYPNF CoLtd
Assuming the 90 days trading horizon KakaoBank Corp is expected to generate 0.56 times more return on investment than DYPNF CoLtd. However, KakaoBank Corp is 1.77 times less risky than DYPNF CoLtd. It trades about 0.08 of its potential returns per unit of risk. DYPNF CoLtd is currently generating about 0.01 per unit of risk. If you would invest 2,205,000 in KakaoBank Corp on September 18, 2024 and sell it today you would earn a total of 200,000 from holding KakaoBank Corp or generate 9.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
KakaoBank Corp vs. DYPNF CoLtd
Performance |
Timeline |
KakaoBank Corp |
DYPNF CoLtd |
KakaoBank Corp and DYPNF CoLtd Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KakaoBank Corp and DYPNF CoLtd
The main advantage of trading using opposite KakaoBank Corp and DYPNF CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KakaoBank Corp position performs unexpectedly, DYPNF CoLtd 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 DYPNF CoLtd will offset losses from the drop in DYPNF CoLtd's long position.KakaoBank Corp vs. Shinhan Financial Group | KakaoBank Corp vs. Hana Financial | KakaoBank Corp vs. Woori Financial Group | KakaoBank Corp vs. Industrial Bank |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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