Correlation Between Design and KyungIn Electronics

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

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

Diversification Opportunities for Design and KyungIn Electronics

-0.41

Correlation Coefficient

Design  KyungIn Electronics

Very good diversification

The 3 months correlation between Design and KyungIn is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Design Co and KyungIn Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KyungIn Electronics and Design 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 Design Co are associated (or correlated) with KyungIn Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KyungIn Electronics has no effect on the direction of Design i.e., Design and KyungIn Electronics go up and down completely randomly.

Pair Corralation between Design and KyungIn Electronics

Assuming the 90 days trading horizon Design Co is expected to under-perform the KyungIn Electronics. In addition to that, Design is 2.11 times more volatile than KyungIn Electronics Co. It trades about -0.28 of its total potential returns per unit of risk. KyungIn Electronics Co is currently generating about -0.04 per unit of volatility. If you would invest  2,090,000  in KyungIn Electronics Co on September 23, 2024 and sell it today you would lose (70,000) from holding KyungIn Electronics Co or give up 3.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Design Co  vs.  KyungIn Electronics Co

Design

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Design Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Design sustained solid returns over the last few months and may actually be approaching a breakup point.

KyungIn Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Design and KyungIn Electronics

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

The idea behind Design Co and KyungIn Electronics 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.