Correlation Between Leaders Technology and Kolon Plastics
Can any of the company-specific risk be diversified away by investing in both Leaders Technology and Kolon Plastics 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 Leaders Technology and Kolon Plastics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leaders Technology Investment and Kolon Plastics, you can compare the effects of market volatilities on Leaders Technology and Kolon Plastics 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 Leaders Technology with a short position of Kolon Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leaders Technology and Kolon Plastics.
Diversification Opportunities for Leaders Technology and Kolon Plastics
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Leaders and Kolon is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Leaders Technology Investment and Kolon Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kolon Plastics and Leaders Technology 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 Leaders Technology Investment are associated (or correlated) with Kolon Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kolon Plastics has no effect on the direction of Leaders Technology i.e., Leaders Technology and Kolon Plastics go up and down completely randomly.
Pair Corralation between Leaders Technology and Kolon Plastics
Assuming the 90 days trading horizon Leaders Technology Investment is expected to generate 2.06 times more return on investment than Kolon Plastics. However, Leaders Technology is 2.06 times more volatile than Kolon Plastics. It trades about 0.1 of its potential returns per unit of risk. Kolon Plastics is currently generating about 0.18 per unit of risk. If you would invest 27,500 in Leaders Technology Investment on October 11, 2024 and sell it today you would earn a total of 1,700 from holding Leaders Technology Investment or generate 6.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leaders Technology Investment vs. Kolon Plastics
Performance |
| Timeline |
| Leaders Technology |
| Kolon Plastics |
Leaders Technology and Kolon Plastics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leaders Technology and Kolon Plastics
The main advantage of trading using opposite Leaders Technology and Kolon Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leaders Technology position performs unexpectedly, Kolon Plastics 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 Kolon Plastics will offset losses from the drop in Kolon Plastics' long position.| Leaders Technology vs. Korea Information Engineering | Leaders Technology vs. PI Advanced Materials | Leaders Technology vs. Koryo Credit Information | Leaders Technology vs. RF Materials Co |
| Kolon Plastics vs. Leaders Technology Investment | Kolon Plastics vs. Korea Investment Holdings | Kolon Plastics vs. Coloray International Investment | Kolon Plastics vs. SBI Investment KOREA |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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