Correlation Between Kukdo Chemical and Genolution

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

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

Diversification Opportunities for Kukdo Chemical and Genolution

0.92

Correlation Coefficient

Kukdo Chemical  Genolution

Almost no diversification

The 3 months correlation between Kukdo and Genolution is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Kukdo Chemical Co and Genolution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genolution and Kukdo Chemical 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 Kukdo Chemical Co are associated (or correlated) with Genolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genolution has no effect on the direction of Kukdo Chemical i.e., Kukdo Chemical and Genolution go up and down completely randomly.

Pair Corralation between Kukdo Chemical and Genolution

Assuming the 90 days trading horizon Kukdo Chemical Co is expected to generate 0.74 times more return on investment than Genolution. However, Kukdo Chemical Co is 1.36 times less risky than Genolution. It trades about -0.02 of its potential returns per unit of risk. Genolution is currently generating about -0.04 per unit of risk. If you would invest  4,253,927  in Kukdo Chemical Co on September 28, 2024 and sell it today you would lose (1,143,927) from holding Kukdo Chemical Co or give up 26.89% of portfolio value over 90 days.

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

Kukdo Chemical Co  vs.  Genolution

Kukdo Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kukdo Chemical Co 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.

Genolution

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genolution 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.

Pair Trading with Kukdo Chemical and Genolution

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

The idea behind Kukdo Chemical Co and Genolution 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.