Correlation Between Aprogen KIC and Korea New

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

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

Diversification Opportunities for Aprogen KIC and Korea New

-0.67

Correlation Coefficient

Aprogen KIC  Korea New

Excellent diversification

The 3 months correlation between Aprogen and Korea is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Aprogen KIC and Korea New Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea New Network and Aprogen KIC 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 Aprogen KIC are associated (or correlated) with Korea New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea New Network has no effect on the direction of Aprogen KIC i.e., Aprogen KIC and Korea New go up and down completely randomly.

Pair Corralation between Aprogen KIC and Korea New

Assuming the 90 days trading horizon Aprogen KIC is expected to under-perform the Korea New. In addition to that, Aprogen KIC is 1.7 times more volatile than Korea New Network. It trades about -0.13 of its total potential returns per unit of risk. Korea New Network is currently generating about 0.15 per unit of volatility. If you would invest  72,200  in Korea New Network on September 21, 2024 and sell it today you would earn a total of  16,500  from holding Korea New Network or generate 22.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Aprogen KIC  vs.  Korea New Network

Aprogen KIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aprogen KIC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Korea New Network

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Korea New Network are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Korea New sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aprogen KIC and Korea New

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

The idea behind Aprogen KIC and Korea New Network 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.