Correlation Between Kyeryong Construction and Sungchang Autotech
Can any of the company-specific risk be diversified away by investing in both Kyeryong Construction and Sungchang Autotech 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 Kyeryong Construction and Sungchang Autotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kyeryong Construction Industrial and Sungchang Autotech Co, you can compare the effects of market volatilities on Kyeryong Construction and Sungchang Autotech 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 Kyeryong Construction with a short position of Sungchang Autotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kyeryong Construction and Sungchang Autotech.
Diversification Opportunities for Kyeryong Construction and Sungchang Autotech
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kyeryong and Sungchang is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Kyeryong Construction Industri and Sungchang Autotech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungchang Autotech and Kyeryong Construction 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 Kyeryong Construction Industrial are associated (or correlated) with Sungchang Autotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungchang Autotech has no effect on the direction of Kyeryong Construction i.e., Kyeryong Construction and Sungchang Autotech go up and down completely randomly.
Pair Corralation between Kyeryong Construction and Sungchang Autotech
Assuming the 90 days trading horizon Kyeryong Construction Industrial is expected to generate 0.82 times more return on investment than Sungchang Autotech. However, Kyeryong Construction Industrial is 1.22 times less risky than Sungchang Autotech. It trades about 0.06 of its potential returns per unit of risk. Sungchang Autotech Co is currently generating about -0.05 per unit of risk. If you would invest 1,292,000 in Kyeryong Construction Industrial on September 21, 2024 and sell it today you would earn a total of 27,000 from holding Kyeryong Construction Industrial or generate 2.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kyeryong Construction Industri vs. Sungchang Autotech Co
Performance |
| Timeline |
| Kyeryong Construction |
| Sungchang Autotech |
Kyeryong Construction and Sungchang Autotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kyeryong Construction and Sungchang Autotech
The main advantage of trading using opposite Kyeryong Construction and Sungchang Autotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kyeryong Construction position performs unexpectedly, Sungchang Autotech 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 Sungchang Autotech will offset losses from the drop in Sungchang Autotech's long position.The idea behind Kyeryong Construction Industrial and Sungchang Autotech Co 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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