Correlation Between Ssangyong Materials and Kg Chemical

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

By analyzing existing cross correlation between Ssangyong Materials Corp and Kg Chemical, you can compare the effects of market volatilities on Ssangyong Materials and Kg Chemical 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 Ssangyong Materials with a short position of Kg Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ssangyong Materials and Kg Chemical.

Diversification Opportunities for Ssangyong Materials and Kg Chemical

0.6

Correlation Coefficient

Ssangyong Materials  Kg Chemical

Poor diversification

The 3 months correlation between Ssangyong and 001390 is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ssangyong Materials Corp and Kg Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kg Chemical and Ssangyong Materials 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 Ssangyong Materials Corp are associated (or correlated) with Kg Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kg Chemical has no effect on the direction of Ssangyong Materials i.e., Ssangyong Materials and Kg Chemical go up and down completely randomly.

Pair Corralation between Ssangyong Materials and Kg Chemical

Assuming the 90 days trading horizon Ssangyong Materials Corp is expected to under-perform the Kg Chemical. In addition to that, Ssangyong Materials is 1.34 times more volatile than Kg Chemical. It trades about -0.03 of its total potential returns per unit of risk. Kg Chemical is currently generating about 0.0 per unit of volatility. If you would invest  386,334  in Kg Chemical on October 27, 2024 and sell it today you would lose (9,334) from holding Kg Chemical or give up 2.42% of portfolio value over 90 days.

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

Ssangyong Materials Corp  vs.  Kg Chemical

Ssangyong Materials Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kg Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ssangyong Materials and Kg Chemical

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

The idea behind Ssangyong Materials Corp and Kg Chemical 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.