Correlation Between Ama Marine and Kang Yong

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

By analyzing existing cross correlation between Ama Marine Public and Kang Yong Electric, you can compare the effects of market volatilities on Ama Marine and Kang Yong 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 Ama Marine with a short position of Kang Yong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ama Marine and Kang Yong.

Diversification Opportunities for Ama Marine and Kang Yong

0.39

Correlation Coefficient

Ama Marine  Kang Yong

Weak diversification

The 3 months correlation between Ama and Kang is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ama Marine Public and Kang Yong Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kang Yong Electric and Ama Marine 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 Ama Marine Public are associated (or correlated) with Kang Yong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kang Yong Electric has no effect on the direction of Ama Marine i.e., Ama Marine and Kang Yong go up and down completely randomly.

Pair Corralation between Ama Marine and Kang Yong

Assuming the 90 days trading horizon Ama Marine Public is expected to under-perform the Kang Yong. But the stock apears to be less risky and, when comparing its historical volatility, Ama Marine Public is 27.62 times less risky than Kang Yong. The stock trades about -0.01 of its potential returns per unit of risk. The Kang Yong Electric is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  29,642  in Kang Yong Electric on October 4, 2024 and sell it today you would lose (842.00) from holding Kang Yong Electric or give up 2.84% of portfolio value over 90 days.

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

Ama Marine Public  vs.  Kang Yong Electric

Ama Marine Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ama Marine Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Ama Marine is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Kang Yong Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kang Yong Electric has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Kang Yong is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ama Marine and Kang Yong

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

The idea behind Ama Marine Public and Kang Yong Electric 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.