Correlation Between Keyang Electric and Mirae Asset
Can any of the company-specific risk be diversified away by investing in both Keyang Electric and Mirae Asset 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 Keyang Electric and Mirae Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keyang Electric Machinery and Mirae Asset Daewoo, you can compare the effects of market volatilities on Keyang Electric and Mirae Asset 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 Keyang Electric with a short position of Mirae Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keyang Electric and Mirae Asset.
Diversification Opportunities for Keyang Electric and Mirae Asset
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Keyang and Mirae is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Keyang Electric Machinery and Mirae Asset Daewoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirae Asset Daewoo and Keyang Electric 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 Keyang Electric Machinery are associated (or correlated) with Mirae Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirae Asset Daewoo has no effect on the direction of Keyang Electric i.e., Keyang Electric and Mirae Asset go up and down completely randomly.
Pair Corralation between Keyang Electric and Mirae Asset
Assuming the 90 days trading horizon Keyang Electric Machinery is expected to under-perform the Mirae Asset. But the stock apears to be less risky and, when comparing its historical volatility, Keyang Electric Machinery is 2.31 times less risky than Mirae Asset. The stock trades about -0.06 of its potential returns per unit of risk. The Mirae Asset Daewoo is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 421,000 in Mirae Asset Daewoo on September 2, 2024 and sell it today you would earn a total of 27,000 from holding Mirae Asset Daewoo or generate 6.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keyang Electric Machinery vs. Mirae Asset Daewoo
Performance |
| Timeline |
| Keyang Electric Machinery |
| Mirae Asset Daewoo |
Keyang Electric and Mirae Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keyang Electric and Mirae Asset
The main advantage of trading using opposite Keyang Electric and Mirae Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keyang Electric position performs unexpectedly, Mirae Asset 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 Mirae Asset will offset losses from the drop in Mirae Asset's long position.| Keyang Electric vs. Busan Industrial Co | Keyang Electric vs. Busan Ind | Keyang Electric vs. Mirae Asset Daewoo | Keyang Electric vs. Finebesteel |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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