Correlation Between Korea Closed and Central Europe

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

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

Diversification Opportunities for Korea Closed and Central Europe

-0.8

Correlation Coefficient

Korea Closed  Central Europe

Pay attention - limited upside

The 3 months correlation between Korea and Central is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Korea Closed and Central Europe Russia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Europe Russia and Korea Closed 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 Closed are associated (or correlated) with Central Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Europe Russia has no effect on the direction of Korea Closed i.e., Korea Closed and Central Europe go up and down completely randomly.

Pair Corralation between Korea Closed and Central Europe

Allowing for the 90-day total investment horizon Korea Closed is expected to under-perform the Central Europe. But the fund apears to be less risky and, when comparing its historical volatility, Korea Closed is 2.02 times less risky than Central Europe. The fund trades about -0.31 of its potential returns per unit of risk. The Central Europe Russia is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,072  in Central Europe Russia on September 5, 2024 and sell it today you would earn a total of  86.00  from holding Central Europe Russia or generate 8.02% return on investment over 90 days.

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

Korea Closed  vs.  Central Europe Russia

Korea Closed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Korea Closed has generated negative risk-adjusted returns adding no value to fund investors. Despite unsteady performance in the last few months, the Fund's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the mutual fund stockholders.

Central Europe Russia

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Central Europe Russia are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather fragile technical and fundamental indicators, Central Europe may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Korea Closed and Central Europe

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

The idea behind Korea Closed and Central Europe Russia 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.