Correlation Between KCC Engineering and Solution Advanced
Can any of the company-specific risk be diversified away by investing in both KCC Engineering and Solution Advanced 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 Solution Advanced 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 Solution Advanced Technology, you can compare the effects of market volatilities on KCC Engineering and Solution Advanced 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 Solution Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of KCC Engineering and Solution Advanced.
Diversification Opportunities for KCC Engineering and Solution Advanced
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KCC and Solution is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding KCC Engineering Construction and Solution Advanced Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Advanced 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 Solution Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Advanced has no effect on the direction of KCC Engineering i.e., KCC Engineering and Solution Advanced go up and down completely randomly.
Pair Corralation between KCC Engineering and Solution Advanced
Assuming the 90 days trading horizon KCC Engineering Construction is expected to generate 0.5 times more return on investment than Solution Advanced. However, KCC Engineering Construction is 2.0 times less risky than Solution Advanced. It trades about -0.06 of its potential returns per unit of risk. Solution Advanced Technology is currently generating about -0.06 per unit of risk. If you would invest 538,804 in KCC Engineering Construction on September 14, 2024 and sell it today you would lose (131,804) from holding KCC Engineering Construction or give up 24.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.62% |
| Values | Daily Returns |
KCC Engineering Construction vs. Solution Advanced Technology
Performance |
| Timeline |
| KCC Engineering Cons |
| Solution Advanced |
KCC Engineering and Solution Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KCC Engineering and Solution Advanced
The main advantage of trading using opposite KCC Engineering and Solution Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KCC Engineering position performs unexpectedly, Solution Advanced 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 Solution Advanced will offset losses from the drop in Solution Advanced'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 |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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