Correlation Between Celltrion Pharm and Kmw

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

By analyzing existing cross correlation between Celltrion Pharm and Kmw Inc, you can compare the effects of market volatilities on Celltrion Pharm and Kmw 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 Celltrion Pharm with a short position of Kmw. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celltrion Pharm and Kmw.

Diversification Opportunities for Celltrion Pharm and Kmw

-0.19

Correlation Coefficient

Celltrion Pharm  Kmw

Good diversification

The 3 months correlation between Celltrion and Kmw is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Celltrion Pharm and Kmw Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kmw Inc and Celltrion Pharm 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 Celltrion Pharm are associated (or correlated) with Kmw. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kmw Inc has no effect on the direction of Celltrion Pharm i.e., Celltrion Pharm and Kmw go up and down completely randomly.

Pair Corralation between Celltrion Pharm and Kmw

Assuming the 90 days trading horizon Celltrion Pharm is expected to generate 0.7 times more return on investment than Kmw. However, Celltrion Pharm is 1.42 times less risky than Kmw. It trades about -0.09 of its potential returns per unit of risk. Kmw Inc is currently generating about -0.07 per unit of risk. If you would invest  5,670,000  in Celltrion Pharm on December 30, 2024 and sell it today you would lose (590,000) from holding Celltrion Pharm or give up 10.41% of portfolio value over 90 days.

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

Celltrion Pharm  vs.  Kmw Inc

Celltrion Pharm

Risk-Adjusted Performance

Very Weak

Over the last 90 days Celltrion Pharm 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.

Kmw Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kmw Inc 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.

Pair Trading with Celltrion Pharm and Kmw

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

The idea behind Celltrion Pharm and Kmw Inc 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.

Check out your portfolio center.

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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.