Correlation Between Kyung Chang and LX Semicon

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

Diversification Opportunities for Kyung Chang and LX Semicon

0.01

Correlation Coefficient

Kyung Chang  LX Semicon

Significant diversification

The 3 months correlation between Kyung and 108320 is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kyung Chang Industrial and LX Semicon Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LX Semicon 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 LX Semicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LX Semicon has no effect on the direction of Kyung Chang i.e., Kyung Chang and LX Semicon go up and down completely randomly.

Pair Corralation between Kyung Chang and LX Semicon

Assuming the 90 days trading horizon Kyung Chang Industrial is expected to under-perform the LX Semicon. But the stock apears to be less risky and, when comparing its historical volatility, Kyung Chang Industrial is 1.15 times less risky than LX Semicon. The stock trades about -0.03 of its potential returns per unit of risk. The LX Semicon Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  5,450,000  in LX Semicon Co on November 28, 2024 and sell it today you would earn a total of  900,000  from holding LX Semicon Co or generate 16.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Kyung Chang Industrial  vs.  LX Semicon 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 somewhat strong basic indicators, Kyung Chang is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

LX Semicon

Risk-Adjusted Performance

OK

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

Pair Trading with Kyung Chang and LX Semicon

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

The idea behind Kyung Chang Industrial and LX Semicon 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..