Correlation Between Koh Young and KG Eco

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

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

Diversification Opportunities for Koh Young and KG Eco

0.58

Correlation Coefficient

Koh Young  KG Eco

Very weak diversification

The 3 months correlation between Koh and 151860 is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Koh Young Technology and KG Eco Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KG Eco Technology and Koh Young 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 Koh Young Technology are associated (or correlated) with KG Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KG Eco Technology has no effect on the direction of Koh Young i.e., Koh Young and KG Eco go up and down completely randomly.

Pair Corralation between Koh Young and KG Eco

Assuming the 90 days trading horizon Koh Young Technology is expected to generate 2.09 times more return on investment than KG Eco. However, Koh Young is 2.09 times more volatile than KG Eco Technology. It trades about 0.28 of its potential returns per unit of risk. KG Eco Technology is currently generating about 0.08 per unit of risk. If you would invest  822,000  in Koh Young Technology on November 29, 2024 and sell it today you would earn a total of  1,042,000  from holding Koh Young Technology or generate 126.76% return on investment over 90 days.

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

Koh Young Technology  vs.  KG Eco Technology

Koh Young Technology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Koh Young Technology are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Koh Young sustained solid returns over the last few months and may actually be approaching a breakup point.

KG Eco Technology

Risk-Adjusted Performance

Modest

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

Pair Trading with Koh Young and KG Eco

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

The idea behind Koh Young Technology and KG Eco Technology 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.