Correlation Between KG Eco and Konan Technology

Can any of the company-specific risk be diversified away by investing in both KG Eco and Konan Technology 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 Konan Technology 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 Konan Technology, you can compare the effects of market volatilities on KG Eco and Konan Technology 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 Konan Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of KG Eco and Konan Technology.

Diversification Opportunities for KG Eco and Konan Technology

-0.43

Correlation Coefficient

KG Eco  Konan Technology

Very good diversification

The 3 months correlation between 151860 and Konan is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding KG Eco Technology and Konan Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Konan Technology 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 Konan Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Konan Technology has no effect on the direction of KG Eco i.e., KG Eco and Konan Technology go up and down completely randomly.

Pair Corralation between KG Eco and Konan Technology

Assuming the 90 days trading horizon KG Eco Technology is expected to under-perform the Konan Technology. But the stock apears to be less risky and, when comparing its historical volatility, KG Eco Technology is 1.54 times less risky than Konan Technology. The stock trades about -0.06 of its potential returns per unit of risk. The Konan Technology is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,515,000  in Konan Technology on August 31, 2024 and sell it today you would earn a total of  985,000  from holding Konan Technology or generate 65.02% return on investment over 90 days.

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

KG Eco Technology  vs.  Konan Technology

KG Eco Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KG Eco Technology 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.

Konan Technology

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Konan Technology are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Konan Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KG Eco and Konan Technology

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

The idea behind KG Eco Technology and Konan 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.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.