Correlation Between KG Eco and Innowireless

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

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

Diversification Opportunities for KG Eco and Innowireless

0.34

Correlation Coefficient

KG Eco  Innowireless

Weak diversification

The 3 months correlation between 151860 and Innowireless is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding KG Eco Technology and Innowireless Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innowireless and KG Eco 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 KG Eco Technology are associated (or correlated) with Innowireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innowireless has no effect on the direction of KG Eco i.e., KG Eco and Innowireless go up and down completely randomly.

Pair Corralation between KG Eco and Innowireless

Assuming the 90 days trading horizon KG Eco is expected to generate 2.09 times less return on investment than Innowireless. In addition to that, KG Eco is 1.31 times more volatile than Innowireless Co. It trades about 0.07 of its total potential returns per unit of risk. Innowireless Co is currently generating about 0.19 per unit of volatility. If you would invest  1,789,714  in Innowireless Co on November 20, 2024 and sell it today you would earn a total of  445,286  from holding Innowireless Co or generate 24.88% return on investment over 90 days.

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

KG Eco Technology  vs.  Innowireless Co

KG Eco Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KG Eco Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KG Eco may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Innowireless

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Innowireless Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Innowireless sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KG Eco and Innowireless

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

The idea behind KG Eco Technology and Innowireless Co 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.