Correlation Between Korea Shipbuilding and Koh Young

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

By analyzing existing cross correlation between Korea Shipbuilding Offshore and Koh Young Technology, you can compare the effects of market volatilities on Korea Shipbuilding and Koh Young 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 Shipbuilding with a short position of Koh Young. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Shipbuilding and Koh Young.

Diversification Opportunities for Korea Shipbuilding and Koh Young

-0.11

Correlation Coefficient

Korea Shipbuilding  Koh Young

Good diversification

The 3 months correlation between Korea and Koh is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Korea Shipbuilding Offshore and Koh Young Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koh Young Technology and Korea Shipbuilding 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 Shipbuilding Offshore are associated (or correlated) with Koh Young. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koh Young Technology has no effect on the direction of Korea Shipbuilding i.e., Korea Shipbuilding and Koh Young go up and down completely randomly.

Pair Corralation between Korea Shipbuilding and Koh Young

Assuming the 90 days trading horizon Korea Shipbuilding Offshore is expected to under-perform the Koh Young. But the stock apears to be less risky and, when comparing its historical volatility, Korea Shipbuilding Offshore is 1.79 times less risky than Koh Young. The stock trades about -0.04 of its potential returns per unit of risk. The Koh Young Technology is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  803,071  in Koh Young Technology on December 30, 2024 and sell it today you would earn a total of  596,929  from holding Koh Young Technology or generate 74.33% return on investment over 90 days.

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

Korea Shipbuilding Offshore  vs.  Koh Young Technology

Korea Shipbuilding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Korea Shipbuilding Offshore 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.

Koh Young Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Koh Young Technology are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Koh Young sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Korea Shipbuilding and Koh Young

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

The idea behind Korea Shipbuilding Offshore and Koh Young Technology 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.