Correlation Between KCC and Daejung Chemicals
Can any of the company-specific risk be diversified away by investing in both KCC and Daejung Chemicals 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 KCC and Daejung Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KCC Corporation and Daejung Chemicals Metals, you can compare the effects of market volatilities on KCC and Daejung Chemicals 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 KCC with a short position of Daejung Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of KCC and Daejung Chemicals.
Diversification Opportunities for KCC and Daejung Chemicals
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KCC and Daejung is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding KCC Corp. and Daejung Chemicals Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejung Chemicals Metals and KCC 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 KCC Corporation are associated (or correlated) with Daejung Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejung Chemicals Metals has no effect on the direction of KCC i.e., KCC and Daejung Chemicals go up and down completely randomly.
Pair Corralation between KCC and Daejung Chemicals
Assuming the 90 days trading horizon KCC Corporation is expected to generate 1.49 times more return on investment than Daejung Chemicals. However, KCC is 1.49 times more volatile than Daejung Chemicals Metals. It trades about -0.16 of its potential returns per unit of risk. Daejung Chemicals Metals is currently generating about -0.31 per unit of risk. If you would invest 25,650,000 in KCC Corporation on September 4, 2024 and sell it today you would lose (2,050,000) from holding KCC Corporation or give up 7.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
KCC Corp. vs. Daejung Chemicals Metals
Performance |
| Timeline |
| KCC Corporation |
| Daejung Chemicals Metals |
KCC and Daejung Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KCC and Daejung Chemicals
The main advantage of trading using opposite KCC and Daejung Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KCC position performs unexpectedly, Daejung Chemicals 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 Daejung Chemicals will offset losses from the drop in Daejung Chemicals' long position.| KCC vs. Daejung Chemicals Metals | KCC vs. Heungkuk Metaltech CoLtd | KCC vs. Kbi Metal Co | KCC vs. Hanjoo Light Metal |
| Daejung Chemicals vs. Korea Information Communications | Daejung Chemicals vs. TS Investment Corp | Daejung Chemicals vs. Daelim Trading Co | Daejung Chemicals vs. Jeju Semiconductor Corp |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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