Correlation Between Korea Closed and Small Cap

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

By analyzing existing cross correlation between Korea Closed and Small Cap Equity, you can compare the effects of market volatilities on Korea Closed and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Closed and Small Cap.

Diversification Opportunities for Korea Closed and Small Cap

0.76

Correlation Coefficient

Korea Closed  Small Cap

Poor diversification

The 3 months correlation between Korea and Small is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Korea Closed and Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Equity 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Equity has no effect on the direction of Korea Closed i.e., Korea Closed and Small Cap go up and down completely randomly.

Pair Corralation between Korea Closed and Small Cap

Allowing for the 90-day total investment horizon Korea Closed is expected to generate 1.16 times more return on investment than Small Cap. However, Korea Closed is 1.16 times more volatile than Small Cap Equity. It trades about 0.25 of its potential returns per unit of risk. Small Cap Equity is currently generating about 0.04 per unit of risk. If you would invest  2,127  in Korea Closed on May 4, 2025 and sell it today you would earn a total of  554.00  from holding Korea Closed or generate 26.05% return on investment over 90 days.

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

Korea Closed  vs.  Small Cap Equity

Korea Closed

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Closed are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly fragile technical and fundamental indicators, Korea Closed reported solid returns over the last few months and may actually be approaching a breakup point.

Small Cap Equity

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Equity are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Small Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Korea Closed and Small Cap

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

The idea behind Korea Closed and Small Cap Equity 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 CEOs Directory module to screen CEOs from public companies around the world.