Correlation Between Sung Bo and Kia Corp
Can any of the company-specific risk be diversified away by investing in both Sung Bo and Kia Corp 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 Sung Bo and Kia Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sung Bo Chemicals and Kia Corp, you can compare the effects of market volatilities on Sung Bo and Kia Corp 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 Sung Bo with a short position of Kia Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sung Bo and Kia Corp.
Diversification Opportunities for Sung Bo and Kia Corp
Very weak diversification
The 3 months correlation between Sung and Kia is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sung Bo Chemicals and Kia Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kia Corp and Sung Bo 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 Sung Bo Chemicals are associated (or correlated) with Kia Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kia Corp has no effect on the direction of Sung Bo i.e., Sung Bo and Kia Corp go up and down completely randomly.
Pair Corralation between Sung Bo and Kia Corp
Assuming the 90 days trading horizon Sung Bo Chemicals is expected to under-perform the Kia Corp. But the stock apears to be less risky and, when comparing its historical volatility, Sung Bo Chemicals is 1.3 times less risky than Kia Corp. The stock trades about -0.02 of its potential returns per unit of risk. The Kia Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,740,633 in Kia Corp on September 12, 2024 and sell it today you would earn a total of 3,839,367 from holding Kia Corp or generate 66.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sung Bo Chemicals vs. Kia Corp
Performance |
| Timeline |
| Sung Bo Chemicals |
| Kia Corp |
Sung Bo and Kia Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sung Bo and Kia Corp
The main advantage of trading using opposite Sung Bo and Kia Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sung Bo position performs unexpectedly, Kia Corp 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 Kia Corp will offset losses from the drop in Kia Corp's long position.| Sung Bo vs. LS Materials | Sung Bo vs. Organic Special Pet | Sung Bo vs. Hyundai Engineering Plastics | Sung Bo vs. Phoenix Materials Co |
| Kia Corp vs. Daou Data Corp | Kia Corp vs. Solution Advanced Technology | Kia Corp vs. Busan Industrial Co | Kia Corp vs. Busan Ind |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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