Correlation Between Kg Chemical and KG Eco
Can any of the company-specific risk be diversified away by investing in both Kg Chemical and KG Eco 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 KG Eco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kg Chemical and KG Eco Technology, you can compare the effects of market volatilities on Kg Chemical and KG Eco 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 KG Eco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kg Chemical and KG Eco.
Diversification Opportunities for Kg Chemical and KG Eco
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between 001390 and 151860 is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Kg Chemical and KG Eco Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KG Eco 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 KG Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KG Eco Technology has no effect on the direction of Kg Chemical i.e., Kg Chemical and KG Eco go up and down completely randomly.
Pair Corralation between Kg Chemical and KG Eco
Assuming the 90 days trading horizon Kg Chemical is expected to generate 1.17 times less return on investment than KG Eco. But when comparing it to its historical volatility, Kg Chemical is 1.4 times less risky than KG Eco. It trades about 0.45 of its potential returns per unit of risk. KG Eco Technology is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 420,965 in KG Eco Technology on October 10, 2024 and sell it today you would earn a total of 88,035 from holding KG Eco Technology or generate 20.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kg Chemical vs. KG Eco Technology
Performance |
| Timeline |
| Kg Chemical |
| KG Eco Technology |
Kg Chemical and KG Eco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kg Chemical and KG Eco
The main advantage of trading using opposite Kg Chemical and KG Eco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kg Chemical position performs unexpectedly, KG Eco 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 KG Eco will offset losses from the drop in KG Eco's long position.| Kg Chemical vs. LG Chemicals | Kg Chemical vs. POSCO Holdings | Kg Chemical vs. Hanwha Solutions | Kg Chemical vs. Lotte Chemical Corp |
| KG Eco vs. Jeju Air Co | KG Eco vs. Hwangkum Steel Technology | KG Eco vs. Korea Air Svc | KG Eco vs. Eagle Veterinary Technology |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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