Correlation Between Daewon Chemical and Kyung Chang
Can any of the company-specific risk be diversified away by investing in both Daewon Chemical and Kyung Chang 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 Daewon Chemical and Kyung Chang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewon Chemical Co and Kyung Chang Industrial, you can compare the effects of market volatilities on Daewon Chemical and Kyung Chang 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 Daewon Chemical with a short position of Kyung Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewon Chemical and Kyung Chang.
Diversification Opportunities for Daewon Chemical and Kyung Chang
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daewon and Kyung is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Daewon Chemical Co and Kyung Chang Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyung Chang Industrial and Daewon Chemical 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 Daewon Chemical Co are associated (or correlated) with Kyung Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyung Chang Industrial has no effect on the direction of Daewon Chemical i.e., Daewon Chemical and Kyung Chang go up and down completely randomly.
Pair Corralation between Daewon Chemical and Kyung Chang
Assuming the 90 days trading horizon Daewon Chemical is expected to generate 3.45 times less return on investment than Kyung Chang. But when comparing it to its historical volatility, Daewon Chemical Co is 2.55 times less risky than Kyung Chang. It trades about 0.06 of its potential returns per unit of risk. Kyung Chang Industrial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 196,309 in Kyung Chang Industrial on October 12, 2024 and sell it today you would earn a total of 6,191 from holding Kyung Chang Industrial or generate 3.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewon Chemical Co vs. Kyung Chang Industrial
Performance |
| Timeline |
| Daewon Chemical |
| Kyung Chang Industrial |
Daewon Chemical and Kyung Chang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewon Chemical and Kyung Chang
The main advantage of trading using opposite Daewon Chemical and Kyung Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewon Chemical position performs unexpectedly, Kyung Chang 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 Kyung Chang will offset losses from the drop in Kyung Chang's long position.| Daewon Chemical vs. Neungyule Education | Daewon Chemical vs. Digital Power Communications | Daewon Chemical vs. Sangsin Energy Display | Daewon Chemical vs. Wireless Power Amplifier |
| Kyung Chang vs. Daewon Chemical Co | Kyung Chang vs. Youngbo Chemical Co | Kyung Chang vs. KPX Green Chemical | Kyung Chang vs. Namhae Chemical |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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