Correlation Between Kia Corp and Wider Planet
Can any of the company-specific risk be diversified away by investing in both Kia Corp and Wider Planet 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 Wider Planet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kia Corp and Wider Planet, you can compare the effects of market volatilities on Kia Corp and Wider Planet 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 Wider Planet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kia Corp and Wider Planet.
Diversification Opportunities for Kia Corp and Wider Planet
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kia and Wider is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Kia Corp and Wider Planet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wider Planet 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 Wider Planet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wider Planet has no effect on the direction of Kia Corp i.e., Kia Corp and Wider Planet go up and down completely randomly.
Pair Corralation between Kia Corp and Wider Planet
Assuming the 90 days trading horizon Kia Corp is expected to generate 3.12 times less return on investment than Wider Planet. But when comparing it to its historical volatility, Kia Corp is 2.72 times less risky than Wider Planet. It trades about 0.06 of its potential returns per unit of risk. Wider Planet is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 579,000 in Wider Planet on September 4, 2024 and sell it today you would earn a total of 1,211,000 from holding Wider Planet or generate 209.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.59% |
| Values | Daily Returns |
Kia Corp vs. Wider Planet
Performance |
| Timeline |
| Kia Corp |
| Wider Planet |
Kia Corp and Wider Planet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kia Corp and Wider Planet
The main advantage of trading using opposite Kia Corp and Wider Planet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kia Corp position performs unexpectedly, Wider Planet 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 Wider Planet will offset losses from the drop in Wider Planet's long position.| Kia Corp vs. Youngbo Chemical Co | Kia Corp vs. BGF Retail Co | Kia Corp vs. Sung Bo Chemicals | Kia Corp vs. Youl Chon Chemical |
| Wider Planet vs. RF Materials Co | Wider Planet vs. Phoenix Materials Co | Wider Planet vs. Top Material Co | Wider Planet vs. Lotte Data Communication |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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