Correlation Between Kia Corp and BYON
Can any of the company-specific risk be diversified away by investing in both Kia Corp and BYON 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 Kia Corp and BYON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kia Corp and BYON Co, you can compare the effects of market volatilities on Kia Corp and BYON 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 Kia Corp with a short position of BYON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kia Corp and BYON.
Diversification Opportunities for Kia Corp and BYON
Poor diversification
The 3 months correlation between Kia and BYON is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kia Corp and BYON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYON and Kia Corp 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 Kia Corp are associated (or correlated) with BYON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYON has no effect on the direction of Kia Corp i.e., Kia Corp and BYON go up and down completely randomly.
Pair Corralation between Kia Corp and BYON
Assuming the 90 days trading horizon Kia Corp is expected to generate 12.37 times less return on investment than BYON. But when comparing it to its historical volatility, Kia Corp is 2.78 times less risky than BYON. It trades about 0.05 of its potential returns per unit of risk. BYON Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 65,200 in BYON Co on August 29, 2024 and sell it today you would earn a total of 18,800 from holding BYON Co or generate 28.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kia Corp vs. BYON Co
Performance |
| Timeline |
| Kia Corp |
| BYON |
Kia Corp and BYON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kia Corp and BYON
The main advantage of trading using opposite Kia Corp and BYON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kia Corp position performs unexpectedly, BYON 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 BYON will offset losses from the drop in BYON's long position.| Kia Corp vs. Samsung Life Insurance | Kia Corp vs. Tway Air Co | Kia Corp vs. Daishin Information Communications | Kia Corp vs. Aprogen Healthcare Games |
| BYON vs. Derkwoo Electronics Co | BYON vs. Digital Power Communications | BYON vs. Daejoo Electronic Materials | BYON vs. LG Electronics |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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