Correlation Between Kg Chemical and Daou Technology
Can any of the company-specific risk be diversified away by investing in both Kg Chemical and Daou Technology 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 Kg Chemical and Daou Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kg Chemical and Daou Technology, you can compare the effects of market volatilities on Kg Chemical and Daou Technology 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 Kg Chemical with a short position of Daou Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kg Chemical and Daou Technology.
Diversification Opportunities for Kg Chemical and Daou Technology
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 001390 and Daou is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Kg Chemical and Daou Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Technology and Kg Chemical 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 Kg Chemical are associated (or correlated) with Daou Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Technology has no effect on the direction of Kg Chemical i.e., Kg Chemical and Daou Technology go up and down completely randomly.
Pair Corralation between Kg Chemical and Daou Technology
Assuming the 90 days trading horizon Kg Chemical is expected to generate 1.13 times more return on investment than Daou Technology. However, Kg Chemical is 1.13 times more volatile than Daou Technology. It trades about 0.08 of its potential returns per unit of risk. Daou Technology is currently generating about -0.01 per unit of risk. If you would invest 366,051 in Kg Chemical on October 17, 2024 and sell it today you would earn a total of 7,949 from holding Kg Chemical or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kg Chemical vs. Daou Technology
Performance |
| Timeline |
| Kg Chemical |
| Daou Technology |
Kg Chemical and Daou Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kg Chemical and Daou Technology
The main advantage of trading using opposite Kg Chemical and Daou Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kg Chemical position performs unexpectedly, Daou Technology 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 Daou Technology will offset losses from the drop in Daou Technology's long position.| Kg Chemical vs. Hwasung Industrial Co | Kg Chemical vs. Pyung Hwa Industrial | Kg Chemical vs. PJ Metal Co | Kg Chemical vs. Dongil Metal Co |
| Daou Technology vs. Dongil Metal Co | Daou Technology vs. Korean Drug Co | Daou Technology vs. Kg Chemical | Daou Technology vs. JC Chemical Co |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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