Correlation Between Kia Corp and IokCompany

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

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

Diversification Opportunities for Kia Corp and IokCompany

-0.39

Correlation Coefficient

Kia Corp  IokCompany

Very good diversification

The 3 months correlation between Kia and IokCompany is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kia Corp and IokCompany Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IokCompany and Kia 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 Kia Corp are associated (or correlated) with IokCompany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IokCompany has no effect on the direction of Kia Corp i.e., Kia Corp and IokCompany go up and down completely randomly.

Pair Corralation between Kia Corp and IokCompany

Assuming the 90 days trading horizon Kia Corp is expected to generate 0.27 times more return on investment than IokCompany. However, Kia Corp is 3.71 times less risky than IokCompany. It trades about 0.2 of its potential returns per unit of risk. IokCompany Co is currently generating about -0.16 per unit of risk. If you would invest  9,380,000  in Kia Corp on December 13, 2024 and sell it today you would earn a total of  530,000  from holding Kia Corp or generate 5.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

Kia Corp  vs.  IokCompany Co

Kia Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kia Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Kia Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

IokCompany

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IokCompany Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IokCompany sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kia Corp and IokCompany

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

The idea behind Kia Corp and IokCompany Co 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.