Correlation Between Kyung Chang and N Citron

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

Diversification Opportunities for Kyung Chang and N Citron

0.65

Correlation Coefficient

Kyung Chang  N Citron

Poor diversification

The 3 months correlation between Kyung and 101400 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Kyung Chang Industrial and N Citron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on N Citron 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 N Citron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of N Citron has no effect on the direction of Kyung Chang i.e., Kyung Chang and N Citron go up and down completely randomly.

Pair Corralation between Kyung Chang and N Citron

Assuming the 90 days trading horizon Kyung Chang Industrial is expected to generate 1.15 times more return on investment than N Citron. However, Kyung Chang is 1.15 times more volatile than N Citron. It trades about -0.06 of its potential returns per unit of risk. N Citron is currently generating about -0.18 per unit of risk. If you would invest  213,000  in Kyung Chang Industrial on September 5, 2024 and sell it today you would lose (14,700) from holding Kyung Chang Industrial or give up 6.9% of portfolio value over 90 days.

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

Kyung Chang Industrial  vs.  N Citron

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.

N Citron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days N Citron has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kyung Chang and N Citron

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

The idea behind Kyung Chang Industrial and N Citron 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.