Correlation Between Kyung Chang and ABOV Semiconductor

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

Diversification Opportunities for Kyung Chang and ABOV Semiconductor

-0.64

Correlation Coefficient

Kyung Chang  ABOV Semiconductor

Excellent diversification

The 3 months correlation between Kyung and ABOV is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Kyung Chang Industrial and ABOV Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABOV Semiconductor 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 ABOV Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABOV Semiconductor has no effect on the direction of Kyung Chang i.e., Kyung Chang and ABOV Semiconductor go up and down completely randomly.

Pair Corralation between Kyung Chang and ABOV Semiconductor

Assuming the 90 days trading horizon Kyung Chang Industrial is expected to under-perform the ABOV Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Kyung Chang Industrial is 3.43 times less risky than ABOV Semiconductor. The stock trades about -0.06 of its potential returns per unit of risk. The ABOV Semiconductor Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  757,000  in ABOV Semiconductor Co on December 30, 2024 and sell it today you would earn a total of  296,000  from holding ABOV Semiconductor Co or generate 39.1% 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.  ABOV Semiconductor 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.

ABOV Semiconductor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ABOV Semiconductor Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ABOV Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kyung Chang and ABOV Semiconductor

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

The idea behind Kyung Chang Industrial and ABOV Semiconductor 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.