Correlation Between Kyung Chang and TES

Can any of the company-specific risk be diversified away by investing in both Kyung Chang and TES 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 TES 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 TES Co, you can compare the effects of market volatilities on Kyung Chang and TES 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 TES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kyung Chang and TES.

Diversification Opportunities for Kyung Chang and TES

-0.72

Correlation Coefficient

Kyung Chang  TES

Pay attention - limited upside

The 3 months correlation between Kyung and TES is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kyung Chang Industrial and TES Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TES Co 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 TES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TES Co has no effect on the direction of Kyung Chang i.e., Kyung Chang and TES go up and down completely randomly.

Pair Corralation between Kyung Chang and TES

Assuming the 90 days trading horizon Kyung Chang Industrial is expected to under-perform the TES. But the stock apears to be less risky and, when comparing its historical volatility, Kyung Chang Industrial is 2.43 times less risky than TES. The stock trades about -0.06 of its potential returns per unit of risk. The TES Co is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,550,000  in TES Co on December 30, 2024 and sell it today you would earn a total of  620,000  from holding TES Co or generate 40.0% return on investment over 90 days.

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

Kyung Chang Industrial  vs.  TES Co

Kyung Chang Industrial

Risk-Adjusted Performance

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.

TES Co

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TES Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TES sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kyung Chang and TES

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

The idea behind Kyung Chang Industrial and TES 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.