Correlation Between DukSan Neolux and KCI

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

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

Diversification Opportunities for DukSan Neolux and KCI

0.66

Correlation Coefficient

DukSan Neolux  KCI

Poor diversification

The 3 months correlation between DukSan and KCI is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding DukSan Neolux CoLtd and KCI Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCI Limited and DukSan Neolux 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 DukSan Neolux CoLtd are associated (or correlated) with KCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KCI Limited has no effect on the direction of DukSan Neolux i.e., DukSan Neolux and KCI go up and down completely randomly.

Pair Corralation between DukSan Neolux and KCI

Assuming the 90 days trading horizon DukSan Neolux CoLtd is expected to under-perform the KCI. In addition to that, DukSan Neolux is 2.63 times more volatile than KCI Limited. It trades about -0.12 of its total potential returns per unit of risk. KCI Limited is currently generating about -0.12 per unit of volatility. If you would invest  740,000  in KCI Limited on September 4, 2024 and sell it today you would lose (72,000) from holding KCI Limited or give up 9.73% of portfolio value over 90 days.

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

DukSan Neolux CoLtd  vs.  KCI Limited

DukSan Neolux CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DukSan Neolux CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

KCI Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KCI Limited 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.

Pair Trading with DukSan Neolux and KCI

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

The idea behind DukSan Neolux CoLtd and KCI Limited 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.