Correlation Between Kang Yong and Advanced Info

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

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

Diversification Opportunities for Kang Yong and Advanced Info

-0.3

Correlation Coefficient

Kang Yong  Advanced Info

Very good diversification

The 3 months correlation between Kang and Advanced is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Kang Yong Electric and Advanced Info Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Info Service and Kang Yong 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 Kang Yong Electric are associated (or correlated) with Advanced Info. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Info Service has no effect on the direction of Kang Yong i.e., Kang Yong and Advanced Info go up and down completely randomly.

Pair Corralation between Kang Yong and Advanced Info

Assuming the 90 days trading horizon Kang Yong Electric is expected to generate 42.41 times more return on investment than Advanced Info. However, Kang Yong is 42.41 times more volatile than Advanced Info Service. It trades about 0.05 of its potential returns per unit of risk. Advanced Info Service is currently generating about 0.08 per unit of risk. If you would invest  27,312  in Kang Yong Electric on October 4, 2024 and sell it today you would earn a total of  1,488  from holding Kang Yong Electric or generate 5.45% return on investment over 90 days.

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

Kang Yong Electric  vs.  Advanced Info Service

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.

Advanced Info Service

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Info Service are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Advanced Info may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Kang Yong and Advanced Info

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

The idea behind Kang Yong Electric and Advanced Info Service 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.