Correlation Between KCC Engineering and SungMoon Electronics
Can any of the company-specific risk be diversified away by investing in both KCC Engineering and SungMoon Electronics 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 KCC Engineering and SungMoon Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KCC Engineering Construction and SungMoon Electronics Co, you can compare the effects of market volatilities on KCC Engineering and SungMoon Electronics 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 KCC Engineering with a short position of SungMoon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of KCC Engineering and SungMoon Electronics.
Diversification Opportunities for KCC Engineering and SungMoon Electronics
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KCC and SungMoon is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding KCC Engineering Construction and SungMoon Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SungMoon Electronics and KCC Engineering 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 KCC Engineering Construction are associated (or correlated) with SungMoon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SungMoon Electronics has no effect on the direction of KCC Engineering i.e., KCC Engineering and SungMoon Electronics go up and down completely randomly.
Pair Corralation between KCC Engineering and SungMoon Electronics
Assuming the 90 days trading horizon KCC Engineering Construction is expected to under-perform the SungMoon Electronics. But the stock apears to be less risky and, when comparing its historical volatility, KCC Engineering Construction is 1.42 times less risky than SungMoon Electronics. The stock trades about -0.04 of its potential returns per unit of risk. The SungMoon Electronics Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 108,100 in SungMoon Electronics Co on December 24, 2024 and sell it today you would earn a total of 3,000 from holding SungMoon Electronics Co or generate 2.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
KCC Engineering Construction vs. SungMoon Electronics Co
Performance |
Timeline |
KCC Engineering Cons |
SungMoon Electronics |
KCC Engineering and SungMoon Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KCC Engineering and SungMoon Electronics
The main advantage of trading using opposite KCC Engineering and SungMoon Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KCC Engineering position performs unexpectedly, SungMoon Electronics 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 SungMoon Electronics will offset losses from the drop in SungMoon Electronics' long position.KCC Engineering vs. ADTechnology CoLtd | KCC Engineering vs. ChipsMedia | KCC Engineering vs. Cube Entertainment | KCC Engineering vs. Cots Technology Co |
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Check out your portfolio center.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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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