Correlation Between Korea Ratings and GemVaxKAEL CoLtd

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

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

Diversification Opportunities for Korea Ratings and GemVaxKAEL CoLtd

-0.68

Correlation Coefficient

Korea Ratings  GemVaxKAEL CoLtd

Excellent diversification

The 3 months correlation between Korea and GemVaxKAEL is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Korea Ratings Co and GemVaxKAEL CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GemVaxKAEL CoLtd and Korea Ratings 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 Ratings Co are associated (or correlated) with GemVaxKAEL CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GemVaxKAEL CoLtd has no effect on the direction of Korea Ratings i.e., Korea Ratings and GemVaxKAEL CoLtd go up and down completely randomly.

Pair Corralation between Korea Ratings and GemVaxKAEL CoLtd

Assuming the 90 days trading horizon Korea Ratings Co is expected to generate 0.33 times more return on investment than GemVaxKAEL CoLtd. However, Korea Ratings Co is 2.99 times less risky than GemVaxKAEL CoLtd. It trades about 0.33 of its potential returns per unit of risk. GemVaxKAEL CoLtd is currently generating about -0.08 per unit of risk. If you would invest  7,920,000  in Korea Ratings Co on February 19, 2024 and sell it today you would earn a total of  820,000  from holding Korea Ratings Co or generate 10.35% return on investment over 90 days.

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

Korea Ratings Co  vs.  GemVaxKAEL CoLtd

Korea Ratings

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Ratings Co are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Korea Ratings may actually be approaching a critical reversion point that can send shares even higher in June 2024.

GemVaxKAEL CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GemVaxKAEL CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Korea Ratings and GemVaxKAEL CoLtd

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

The idea behind Korea Ratings Co and GemVaxKAEL CoLtd 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.