Correlation Between Solution Advanced and Koh Young

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

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

Diversification Opportunities for Solution Advanced and Koh Young

0.63

Correlation Coefficient

Solution Advanced  Koh Young

Poor diversification

The 3 months correlation between Solution and Koh is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Koh Young Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koh Young Technology and Solution Advanced 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 Solution Advanced Technology are associated (or correlated) with Koh Young. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koh Young Technology has no effect on the direction of Solution Advanced i.e., Solution Advanced and Koh Young go up and down completely randomly.

Pair Corralation between Solution Advanced and Koh Young

Assuming the 90 days trading horizon Solution Advanced Technology is expected to generate 1.5 times more return on investment than Koh Young. However, Solution Advanced is 1.5 times more volatile than Koh Young Technology. It trades about 0.08 of its potential returns per unit of risk. Koh Young Technology is currently generating about 0.08 per unit of risk. If you would invest  141,100  in Solution Advanced Technology on September 15, 2024 and sell it today you would earn a total of  7,100  from holding Solution Advanced Technology or generate 5.03% return on investment over 90 days.

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

Solution Advanced Technology  vs.  Koh Young Technology

Solution Advanced

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solution Advanced Technology 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.

Koh Young Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Koh Young Technology 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.

Pair Trading with Solution Advanced and Koh Young

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

The idea behind Solution Advanced Technology and Koh Young 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.