Correlation Between Taeyang Metal and Kumho Industrial
Can any of the company-specific risk be diversified away by investing in both Taeyang Metal and Kumho Industrial 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 Taeyang Metal and Kumho Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taeyang Metal Industrial and Kumho Industrial Co, you can compare the effects of market volatilities on Taeyang Metal and Kumho Industrial 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 Taeyang Metal with a short position of Kumho Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taeyang Metal and Kumho Industrial.
Diversification Opportunities for Taeyang Metal and Kumho Industrial
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Taeyang and Kumho is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Taeyang Metal Industrial and Kumho Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho Industrial and Taeyang Metal 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 Taeyang Metal Industrial are associated (or correlated) with Kumho Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Industrial has no effect on the direction of Taeyang Metal i.e., Taeyang Metal and Kumho Industrial go up and down completely randomly.
Pair Corralation between Taeyang Metal and Kumho Industrial
Assuming the 90 days trading horizon Taeyang Metal Industrial is expected to generate 0.79 times more return on investment than Kumho Industrial. However, Taeyang Metal Industrial is 1.26 times less risky than Kumho Industrial. It trades about 0.33 of its potential returns per unit of risk. Kumho Industrial Co is currently generating about 0.16 per unit of risk. If you would invest 457,000 in Taeyang Metal Industrial on November 28, 2024 and sell it today you would earn a total of 73,000 from holding Taeyang Metal Industrial or generate 15.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taeyang Metal Industrial vs. Kumho Industrial Co
Performance |
| Timeline |
| Taeyang Metal Industrial |
| Kumho Industrial |
Taeyang Metal and Kumho Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taeyang Metal and Kumho Industrial
The main advantage of trading using opposite Taeyang Metal and Kumho Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taeyang Metal position performs unexpectedly, Kumho Industrial 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 Kumho Industrial will offset losses from the drop in Kumho Industrial's long position.| Taeyang Metal vs. Kyeryong Construction Industrial | Taeyang Metal vs. Dongbang Ship Machinery | Taeyang Metal vs. Hyundai Engineering Construction | Taeyang Metal vs. LG Chemicals |
| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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