Correlation Between Tae Kyung and Green Cross

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Can any of the company-specific risk be diversified away by investing in both Tae Kyung and Green Cross 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 Tae Kyung and Green Cross into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tae Kyung Chemical and Green Cross Medical, you can compare the effects of market volatilities on Tae Kyung and Green Cross 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 Tae Kyung with a short position of Green Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tae Kyung and Green Cross.

Diversification Opportunities for Tae Kyung and Green Cross

0.06
  Correlation Coefficient

Significant diversification

The 3 months correlation between Tae and Green is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Tae Kyung Chemical and Green Cross Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Cross Medical and Tae Kyung 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 Tae Kyung Chemical are associated (or correlated) with Green Cross. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Cross Medical has no effect on the direction of Tae Kyung i.e., Tae Kyung and Green Cross go up and down completely randomly.

Pair Corralation between Tae Kyung and Green Cross

Assuming the 90 days trading horizon Tae Kyung Chemical is expected to generate 0.54 times more return on investment than Green Cross. However, Tae Kyung Chemical is 1.85 times less risky than Green Cross. It trades about 0.42 of its potential returns per unit of risk. Green Cross Medical is currently generating about 0.12 per unit of risk. If you would invest  1,107,000  in Tae Kyung Chemical on November 27, 2024 and sell it today you would earn a total of  86,000  from holding Tae Kyung Chemical or generate 7.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Tae Kyung Chemical  vs.  Green Cross Medical

 Performance 
       Timeline  
Tae Kyung Chemical 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Tae Kyung Chemical are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tae Kyung sustained solid returns over the last few months and may actually be approaching a breakup point.
Green Cross Medical 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Green Cross Medical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Green Cross may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Tae Kyung and Green Cross Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tae Kyung and Green Cross

The main advantage of trading using opposite Tae Kyung and Green Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tae Kyung position performs unexpectedly, Green Cross 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 Green Cross will offset losses from the drop in Green Cross' long position.
The idea behind Tae Kyung Chemical and Green Cross Medical pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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