Correlation Between Kyeryong Construction and Samyung Trading

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

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

Diversification Opportunities for Kyeryong Construction and Samyung Trading

-0.03

Correlation Coefficient

Kyeryong Construction  Samyung Trading

Good diversification

The 3 months correlation between Kyeryong and Samyung is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Kyeryong Construction Industri and Samyung Trading Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samyung Trading and Kyeryong Construction 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 Kyeryong Construction Industrial are associated (or correlated) with Samyung Trading. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samyung Trading has no effect on the direction of Kyeryong Construction i.e., Kyeryong Construction and Samyung Trading go up and down completely randomly.

Pair Corralation between Kyeryong Construction and Samyung Trading

Assuming the 90 days trading horizon Kyeryong Construction Industrial is expected to under-perform the Samyung Trading. In addition to that, Kyeryong Construction is 1.68 times more volatile than Samyung Trading Co. It trades about -0.07 of its total potential returns per unit of risk. Samyung Trading Co is currently generating about -0.01 per unit of volatility. If you would invest  1,277,000  in Samyung Trading Co on October 10, 2024 and sell it today you would lose (11,000) from holding Samyung Trading Co or give up 0.86% of portfolio value over 90 days.

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

Kyeryong Construction Industri  vs.  Samyung Trading Co

Kyeryong Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kyeryong Construction Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kyeryong Construction is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Samyung Trading

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samyung Trading Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Samyung Trading is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kyeryong Construction and Samyung Trading

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

The idea behind Kyeryong Construction Industrial and Samyung Trading 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.