Correlation Between Keum Kang and Aprogen Healthcare

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

By analyzing existing cross correlation between Keum Kang Steel and Aprogen Healthcare Games, you can compare the effects of market volatilities on Keum Kang and Aprogen Healthcare 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 Keum Kang with a short position of Aprogen Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keum Kang and Aprogen Healthcare.

Diversification Opportunities for Keum Kang and Aprogen Healthcare

0.12

Correlation Coefficient

Keum Kang  Aprogen Healthcare

Average diversification

The 3 months correlation between Keum and Aprogen is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Keum Kang Steel and Aprogen Healthcare Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aprogen Healthcare Games and Keum Kang 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 Keum Kang Steel are associated (or correlated) with Aprogen Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aprogen Healthcare Games has no effect on the direction of Keum Kang i.e., Keum Kang and Aprogen Healthcare go up and down completely randomly.

Pair Corralation between Keum Kang and Aprogen Healthcare

Assuming the 90 days trading horizon Keum Kang is expected to generate 17.17 times less return on investment than Aprogen Healthcare. But when comparing it to its historical volatility, Keum Kang Steel is 3.04 times less risky than Aprogen Healthcare. It trades about 0.02 of its potential returns per unit of risk. Aprogen Healthcare Games is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  42,600  in Aprogen Healthcare Games on December 2, 2024 and sell it today you would earn a total of  7,800  from holding Aprogen Healthcare Games or generate 18.31% return on investment over 90 days.

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

Keum Kang Steel  vs.  Aprogen Healthcare Games

Keum Kang Steel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Keum Kang Steel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Keum Kang is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aprogen Healthcare Games

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aprogen Healthcare Games are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aprogen Healthcare sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Keum Kang and Aprogen Healthcare

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

The idea behind Keum Kang Steel and Aprogen Healthcare Games 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.