Correlation Between Kumho Industrial and AptaBio Therapeutics
Can any of the company-specific risk be diversified away by investing in both Kumho Industrial and AptaBio Therapeutics 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 Kumho Industrial and AptaBio Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kumho Industrial Co and AptaBio Therapeutics, you can compare the effects of market volatilities on Kumho Industrial and AptaBio Therapeutics 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 Kumho Industrial with a short position of AptaBio Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumho Industrial and AptaBio Therapeutics.
Diversification Opportunities for Kumho Industrial and AptaBio Therapeutics
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kumho and AptaBio is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Kumho Industrial Co and AptaBio Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptaBio Therapeutics and Kumho Industrial 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 Kumho Industrial Co are associated (or correlated) with AptaBio Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AptaBio Therapeutics has no effect on the direction of Kumho Industrial i.e., Kumho Industrial and AptaBio Therapeutics go up and down completely randomly.
Pair Corralation between Kumho Industrial and AptaBio Therapeutics
Assuming the 90 days trading horizon Kumho Industrial Co is expected to under-perform the AptaBio Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Kumho Industrial Co is 1.98 times less risky than AptaBio Therapeutics. The stock trades about -0.07 of its potential returns per unit of risk. The AptaBio Therapeutics is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,310,000 in AptaBio Therapeutics on August 27, 2024 and sell it today you would lose (682,000) from holding AptaBio Therapeutics or give up 52.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kumho Industrial Co vs. AptaBio Therapeutics
Performance |
| Timeline |
| Kumho Industrial |
| AptaBio Therapeutics |
Kumho Industrial and AptaBio Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumho Industrial and AptaBio Therapeutics
The main advantage of trading using opposite Kumho Industrial and AptaBio Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumho Industrial position performs unexpectedly, AptaBio Therapeutics 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 AptaBio Therapeutics will offset losses from the drop in AptaBio Therapeutics' long position.| Kumho Industrial vs. AptaBio Therapeutics | Kumho Industrial vs. Daewoo SBI SPAC | Kumho Industrial vs. Dream Security co | Kumho Industrial vs. Microfriend |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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