Correlation Between KyungIn Electronics and LS Materials
Can any of the company-specific risk be diversified away by investing in both KyungIn Electronics and LS Materials 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 KyungIn Electronics and LS Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KyungIn Electronics Co and LS Materials, you can compare the effects of market volatilities on KyungIn Electronics and LS Materials 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 KyungIn Electronics with a short position of LS Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of KyungIn Electronics and LS Materials.
Diversification Opportunities for KyungIn Electronics and LS Materials
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KyungIn and 417200 is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding KyungIn Electronics Co and LS Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LS Materials and KyungIn Electronics 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 KyungIn Electronics Co are associated (or correlated) with LS Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LS Materials has no effect on the direction of KyungIn Electronics i.e., KyungIn Electronics and LS Materials go up and down completely randomly.
Pair Corralation between KyungIn Electronics and LS Materials
Assuming the 90 days trading horizon KyungIn Electronics Co is expected to under-perform the LS Materials. But the stock apears to be less risky and, when comparing its historical volatility, KyungIn Electronics Co is 2.01 times less risky than LS Materials. The stock trades about -0.26 of its potential returns per unit of risk. The LS Materials is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,112,000 in LS Materials on October 14, 2024 and sell it today you would earn a total of 135,000 from holding LS Materials or generate 12.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KyungIn Electronics Co vs. LS Materials
Performance |
| Timeline |
| KyungIn Electronics |
| LS Materials |
KyungIn Electronics and LS Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KyungIn Electronics and LS Materials
The main advantage of trading using opposite KyungIn Electronics and LS Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KyungIn Electronics position performs unexpectedly, LS Materials 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 LS Materials will offset losses from the drop in LS Materials' long position.The idea behind KyungIn Electronics Co and LS Materials 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.
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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