Correlation Between KPX Green and Sangsin Energy
Can any of the company-specific risk be diversified away by investing in both KPX Green and Sangsin Energy 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 KPX Green and Sangsin Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KPX Green Chemical and Sangsin Energy Display, you can compare the effects of market volatilities on KPX Green and Sangsin Energy 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 KPX Green with a short position of Sangsin Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of KPX Green and Sangsin Energy.
Diversification Opportunities for KPX Green and Sangsin Energy
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KPX and Sangsin is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding KPX Green Chemical and Sangsin Energy Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sangsin Energy Display and KPX Green 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 KPX Green Chemical are associated (or correlated) with Sangsin Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sangsin Energy Display has no effect on the direction of KPX Green i.e., KPX Green and Sangsin Energy go up and down completely randomly.
Pair Corralation between KPX Green and Sangsin Energy
Assuming the 90 days trading horizon KPX Green Chemical is expected to generate 1.29 times more return on investment than Sangsin Energy. However, KPX Green is 1.29 times more volatile than Sangsin Energy Display. It trades about 0.03 of its potential returns per unit of risk. Sangsin Energy Display is currently generating about -0.21 per unit of risk. If you would invest 661,000 in KPX Green Chemical on September 24, 2024 and sell it today you would earn a total of 19,000 from holding KPX Green Chemical or generate 2.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 98.41% |
Values | Daily Returns |
KPX Green Chemical vs. Sangsin Energy Display
Performance |
Timeline |
KPX Green Chemical |
Sangsin Energy Display |
KPX Green and Sangsin Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KPX Green and Sangsin Energy
The main advantage of trading using opposite KPX Green and Sangsin Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KPX Green position performs unexpectedly, Sangsin Energy 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 Sangsin Energy will offset losses from the drop in Sangsin Energy's long position.KPX Green vs. AptaBio Therapeutics | KPX Green vs. Wonbang Tech Co | KPX Green vs. Busan Industrial Co | KPX Green vs. Busan Ind |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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