Correlation Between Wonil Special and Kyeryong Construction
Can any of the company-specific risk be diversified away by investing in both Wonil Special and Kyeryong Construction 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 Wonil Special and Kyeryong Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wonil Special Steel and Kyeryong Construction Industrial, you can compare the effects of market volatilities on Wonil Special and Kyeryong Construction 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 Wonil Special with a short position of Kyeryong Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonil Special and Kyeryong Construction.
Diversification Opportunities for Wonil Special and Kyeryong Construction
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Wonil and Kyeryong is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Wonil Special Steel and Kyeryong Construction Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyeryong Construction and Wonil Special 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 Wonil Special Steel are associated (or correlated) with Kyeryong Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyeryong Construction has no effect on the direction of Wonil Special i.e., Wonil Special and Kyeryong Construction go up and down completely randomly.
Pair Corralation between Wonil Special and Kyeryong Construction
Assuming the 90 days trading horizon Wonil Special Steel is expected to generate 0.86 times more return on investment than Kyeryong Construction. However, Wonil Special Steel is 1.16 times less risky than Kyeryong Construction. It trades about 0.28 of its potential returns per unit of risk. Kyeryong Construction Industrial is currently generating about -0.43 per unit of risk. If you would invest 702,270 in Wonil Special Steel on October 22, 2024 and sell it today you would earn a total of 28,730 from holding Wonil Special Steel or generate 4.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wonil Special Steel vs. Kyeryong Construction Industri
Performance |
| Timeline |
| Wonil Special Steel |
| Kyeryong Construction |
Wonil Special and Kyeryong Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wonil Special and Kyeryong Construction
The main advantage of trading using opposite Wonil Special and Kyeryong Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wonil Special position performs unexpectedly, Kyeryong Construction 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 Kyeryong Construction will offset losses from the drop in Kyeryong Construction's long position.| Wonil Special vs. GS Retail Co | Wonil Special vs. Nice Information Telecommunication | Wonil Special vs. Jinro Distillers Co | Wonil Special vs. FoodNamoo |
| Kyeryong Construction vs. Wonil Special Steel | Kyeryong Construction vs. Insun Environment New | Kyeryong Construction vs. Daechang Steel Co | Kyeryong Construction vs. Hankuk Steel Wire |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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