Correlation Between UNISEM and KIM KINDEX

Can any of the company-specific risk be diversified away by investing in both UNISEM and KIM KINDEX 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 UNISEM and KIM KINDEX into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UNISEM Co and KIM KINDEX KOSPI, you can compare the effects of market volatilities on UNISEM and KIM KINDEX 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 UNISEM with a short position of KIM KINDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNISEM and KIM KINDEX.

Diversification Opportunities for UNISEM and KIM KINDEX

0.85

Correlation Coefficient

UNISEM  KIM KINDEX

Very poor diversification

The 3 months correlation between UNISEM and KIM is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding UNISEM Co and KIM KINDEX KOSPI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIM KINDEX KOSPI and UNISEM 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 UNISEM Co are associated (or correlated) with KIM KINDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIM KINDEX KOSPI has no effect on the direction of UNISEM i.e., UNISEM and KIM KINDEX go up and down completely randomly.

Pair Corralation between UNISEM and KIM KINDEX

Assuming the 90 days trading horizon UNISEM Co is expected to under-perform the KIM KINDEX. In addition to that, UNISEM is 2.66 times more volatile than KIM KINDEX KOSPI. It trades about -0.05 of its total potential returns per unit of risk. KIM KINDEX KOSPI is currently generating about -0.05 per unit of volatility. If you would invest  2,692,500  in KIM KINDEX KOSPI on October 10, 2024 and sell it today you would lose (101,500) from holding KIM KINDEX KOSPI or give up 3.77% of portfolio value over 90 days.

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

UNISEM Co  vs.  KIM KINDEX KOSPI

UNISEM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNISEM Co 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.

KIM KINDEX KOSPI

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with UNISEM and KIM KINDEX

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

The idea behind UNISEM Co and KIM KINDEX KOSPI 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.