Correlation Between Kyung Chang and 311960

Can any of the company-specific risk be diversified away by investing in both Kyung Chang and 311960 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 311960 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 311960, you can compare the effects of market volatilities on Kyung Chang and 311960 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 311960. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kyung Chang and 311960.

Diversification Opportunities for Kyung Chang and 311960

-0.47

Correlation Coefficient

Kyung Chang  311960

Very good diversification

The 3 months correlation between Kyung and 311960 is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Kyung Chang Industrial and 311960 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 311960 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 311960. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 311960 has no effect on the direction of Kyung Chang i.e., Kyung Chang and 311960 go up and down completely randomly.

Pair Corralation between Kyung Chang and 311960

Assuming the 90 days trading horizon Kyung Chang Industrial is expected to under-perform the 311960. But the stock apears to be less risky and, when comparing its historical volatility, Kyung Chang Industrial is 2.45 times less risky than 311960. The stock trades about -0.02 of its potential returns per unit of risk. The 311960 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  309,500  in 311960 on October 24, 2024 and sell it today you would earn a total of  8,500  from holding 311960 or generate 2.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.75%
Values	Daily Returns

Kyung Chang Industrial  vs.  311960

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 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.

311960

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 311960 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 311960 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kyung Chang and 311960

The main advantage of trading using opposite Kyung Chang and 311960 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kyung Chang position performs unexpectedly, 311960 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 311960 will offset losses from the drop in 311960's long position.

The idea behind Kyung Chang Industrial and 311960 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.