Correlation Between Mobile Appliance and Kiwoom

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

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

Diversification Opportunities for Mobile Appliance and Kiwoom

0.07

Correlation Coefficient

Mobile Appliance  Kiwoom

Significant diversification

The 3 months correlation between Mobile and Kiwoom is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Mobile Appliance and Kiwoom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kiwoom and Mobile Appliance 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 Mobile Appliance are associated (or correlated) with Kiwoom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kiwoom has no effect on the direction of Mobile Appliance i.e., Mobile Appliance and Kiwoom go up and down completely randomly.

Pair Corralation between Mobile Appliance and Kiwoom

Assuming the 90 days trading horizon Mobile Appliance is expected to under-perform the Kiwoom. In addition to that, Mobile Appliance is 1.53 times more volatile than Kiwoom. It trades about -0.03 of its total potential returns per unit of risk. Kiwoom is currently generating about 0.0 per unit of volatility. If you would invest  13,460,000  in Kiwoom on September 5, 2024 and sell it today you would lose (260,000) from holding Kiwoom or give up 1.93% of portfolio value over 90 days.

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

Mobile Appliance  vs.  Kiwoom

Mobile Appliance

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kiwoom

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mobile Appliance and Kiwoom

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

The idea behind Mobile Appliance and Kiwoom 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 Anywhere module to track or share privately all of your investments from the convenience of any device.