Correlation Between Kyung Chang and DAEA TI

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

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

Diversification Opportunities for Kyung Chang and DAEA TI

-0.46

Correlation Coefficient

Kyung Chang  DAEA TI

Very good diversification

The 3 months correlation between Kyung and DAEA is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Kyung Chang Industrial and DAEA TI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAEA TI and Kyung Chang 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 Kyung Chang Industrial are associated (or correlated) with DAEA TI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAEA TI has no effect on the direction of Kyung Chang i.e., Kyung Chang and DAEA TI go up and down completely randomly.

Pair Corralation between Kyung Chang and DAEA TI

Assuming the 90 days trading horizon Kyung Chang Industrial is expected to under-perform the DAEA TI. But the stock apears to be less risky and, when comparing its historical volatility, Kyung Chang Industrial is 1.29 times less risky than DAEA TI. The stock trades about -0.09 of its potential returns per unit of risk. The DAEA TI Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  259,000  in DAEA TI Co on September 4, 2024 and sell it today you would earn a total of  15,000  from holding DAEA TI Co or generate 5.79% return on investment over 90 days.

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

Kyung Chang Industrial  vs.  DAEA TI Co

Kyung Chang Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kyung Chang Industrial 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.

DAEA TI

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DAEA TI Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, DAEA TI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kyung Chang and DAEA TI

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

The idea behind Kyung Chang Industrial and DAEA TI 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.