Correlation Between KCI and Mirae Asset

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

By analyzing existing cross correlation between KCI Limited and Mirae Asset Daewoo, you can compare the effects of market volatilities on KCI and Mirae Asset 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 KCI with a short position of Mirae Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of KCI and Mirae Asset.

Diversification Opportunities for KCI and Mirae Asset

-0.66

Correlation Coefficient

KCI  Mirae Asset

Excellent diversification

The 3 months correlation between KCI and Mirae is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding KCI Limited and Mirae Asset Daewoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirae Asset Daewoo and KCI 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 KCI Limited are associated (or correlated) with Mirae Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirae Asset Daewoo has no effect on the direction of KCI i.e., KCI and Mirae Asset go up and down completely randomly.

Pair Corralation between KCI and Mirae Asset

Assuming the 90 days trading horizon KCI Limited is expected to under-perform the Mirae Asset. But the stock apears to be less risky and, when comparing its historical volatility, KCI Limited is 1.27 times less risky than Mirae Asset. The stock trades about -0.15 of its potential returns per unit of risk. The Mirae Asset Daewoo is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  401,638  in Mirae Asset Daewoo on December 30, 2024 and sell it today you would earn a total of  51,362  from holding Mirae Asset Daewoo or generate 12.79% return on investment over 90 days.

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

KCI Limited  vs.  Mirae Asset Daewoo

KCI Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days KCI Limited 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.

Mirae Asset Daewoo

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mirae Asset Daewoo are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mirae Asset sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KCI and Mirae Asset

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

The idea behind KCI Limited and Mirae Asset Daewoo 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.