Correlation Between Osang Healthcare and Company K

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

By analyzing existing cross correlation between Osang Healthcare Co,Ltd and Company K Partners, you can compare the effects of market volatilities on Osang Healthcare and Company K 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 Osang Healthcare with a short position of Company K. Check out your portfolio center. Please also check ongoing floating volatility patterns of Osang Healthcare and Company K.

Diversification Opportunities for Osang Healthcare and Company K

0.46

Correlation Coefficient

Osang Healthcare  Company K

Very weak diversification

The 3 months correlation between Osang and Company is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Osang Healthcare Co,Ltd and Company K Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Company K Partners and Osang Healthcare 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 Osang Healthcare Co,Ltd are associated (or correlated) with Company K. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Company K Partners has no effect on the direction of Osang Healthcare i.e., Osang Healthcare and Company K go up and down completely randomly.

Pair Corralation between Osang Healthcare and Company K

Assuming the 90 days trading horizon Osang Healthcare Co,Ltd is expected to under-perform the Company K. In addition to that, Osang Healthcare is 1.34 times more volatile than Company K Partners. It trades about -0.07 of its total potential returns per unit of risk. Company K Partners is currently generating about -0.02 per unit of volatility. If you would invest  516,000  in Company K Partners on October 7, 2024 and sell it today you would lose (19,500) from holding Company K Partners or give up 3.78% of portfolio value over 90 days.

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

Osang Healthcare Co,Ltd  vs.  Company K Partners

Osang Healthcare Co,Ltd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Osang Healthcare Co,Ltd 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.

Company K Partners

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Osang Healthcare and Company K

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

The idea behind Osang Healthcare Co,Ltd and Company K Partners 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.