Correlation Between KCC Engineering and YG Entertainment
Can any of the company-specific risk be diversified away by investing in both KCC Engineering and YG Entertainment 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 YG Entertainment 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 YG Entertainment, you can compare the effects of market volatilities on KCC Engineering and YG Entertainment 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 YG Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of KCC Engineering and YG Entertainment.
Diversification Opportunities for KCC Engineering and YG Entertainment
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KCC and 122870 is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding KCC Engineering Construction and YG Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YG Entertainment 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 YG Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YG Entertainment has no effect on the direction of KCC Engineering i.e., KCC Engineering and YG Entertainment go up and down completely randomly.
Pair Corralation between KCC Engineering and YG Entertainment
Assuming the 90 days trading horizon KCC Engineering Construction is expected to under-perform the YG Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, KCC Engineering Construction is 1.83 times less risky than YG Entertainment. The stock trades about -0.04 of its potential returns per unit of risk. The YG Entertainment is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 4,920,211 in YG Entertainment on September 24, 2024 and sell it today you would lose (335,211) from holding YG Entertainment or give up 6.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
KCC Engineering Construction vs. YG Entertainment
Performance |
| Timeline |
| KCC Engineering Cons |
| YG Entertainment |
KCC Engineering and YG Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KCC Engineering and YG Entertainment
The main advantage of trading using opposite KCC Engineering and YG Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KCC Engineering position performs unexpectedly, YG Entertainment 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 YG Entertainment will offset losses from the drop in YG Entertainment's long position.| KCC Engineering vs. Eugene Technology CoLtd | KCC Engineering vs. Dong A Steel Technology | KCC Engineering vs. Daiyang Metal Co | KCC Engineering vs. Cots Technology Co |
| YG Entertainment vs. Mobileleader CoLtd | YG Entertainment vs. Automobile Pc | YG Entertainment vs. KCC Engineering Construction | YG Entertainment vs. Nable Communications |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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