Correlation Between KCC Engineering and STI
Can any of the company-specific risk be diversified away by investing in both KCC Engineering and STI 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 KCC Engineering and STI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KCC Engineering Construction and STI Co, you can compare the effects of market volatilities on KCC Engineering and STI 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 KCC Engineering with a short position of STI. Check out your portfolio center. Please also check ongoing floating volatility patterns of KCC Engineering and STI.
Diversification Opportunities for KCC Engineering and STI
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KCC and STI is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding KCC Engineering Construction and STI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STI Co and KCC Engineering 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 KCC Engineering Construction are associated (or correlated) with STI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STI Co has no effect on the direction of KCC Engineering i.e., KCC Engineering and STI go up and down completely randomly.
Pair Corralation between KCC Engineering and STI
Assuming the 90 days trading horizon KCC Engineering Construction is expected to generate 0.47 times more return on investment than STI. However, KCC Engineering Construction is 2.13 times less risky than STI. It trades about 0.02 of its potential returns per unit of risk. STI Co is currently generating about -0.13 per unit of risk. If you would invest 408,000 in KCC Engineering Construction on September 13, 2024 and sell it today you would earn a total of 2,000 from holding KCC Engineering Construction or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
KCC Engineering Construction vs. STI Co
Performance |
| Timeline |
| KCC Engineering Cons |
| STI Co |
KCC Engineering and STI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KCC Engineering and STI
The main advantage of trading using opposite KCC Engineering and STI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KCC Engineering position performs unexpectedly, STI 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 STI will offset losses from the drop in STI's long position.| KCC Engineering vs. Korea New Network | KCC Engineering vs. Solution Advanced Technology | KCC Engineering vs. Busan Industrial Co | KCC Engineering vs. Busan Ind |
| STI vs. Automobile Pc | STI vs. Puloon Technology | STI vs. Ssangyong Information Communication | STI vs. Solution Advanced Technology |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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