Correlation Between Kyung Chang and Shinil Electronics
Can any of the company-specific risk be diversified away by investing in both Kyung Chang and Shinil Electronics 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 Kyung Chang and Shinil Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kyung Chang Industrial and Shinil Electronics Co, you can compare the effects of market volatilities on Kyung Chang and Shinil Electronics 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 Kyung Chang with a short position of Shinil Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kyung Chang and Shinil Electronics.
Diversification Opportunities for Kyung Chang and Shinil Electronics
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kyung and Shinil is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Kyung Chang Industrial and Shinil Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinil Electronics and Kyung Chang 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 Kyung Chang Industrial are associated (or correlated) with Shinil Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinil Electronics has no effect on the direction of Kyung Chang i.e., Kyung Chang and Shinil Electronics go up and down completely randomly.
Pair Corralation between Kyung Chang and Shinil Electronics
Assuming the 90 days trading horizon Kyung Chang Industrial is expected to generate 2.77 times more return on investment than Shinil Electronics. However, Kyung Chang is 2.77 times more volatile than Shinil Electronics Co. It trades about 0.01 of its potential returns per unit of risk. Shinil Electronics Co is currently generating about -0.05 per unit of risk. If you would invest 208,500 in Kyung Chang Industrial on September 12, 2024 and sell it today you would lose (16,000) from holding Kyung Chang Industrial or give up 7.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kyung Chang Industrial vs. Shinil Electronics Co
Performance |
| Timeline |
| Kyung Chang Industrial |
| Shinil Electronics |
Kyung Chang and Shinil Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kyung Chang and Shinil Electronics
The main advantage of trading using opposite Kyung Chang and Shinil Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kyung Chang position performs unexpectedly, Shinil Electronics 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 Shinil Electronics will offset losses from the drop in Shinil Electronics' long position.| Kyung Chang vs. Korea Computer | Kyung Chang vs. SK Telecom Co | Kyung Chang vs. Inzi Display CoLtd | Kyung Chang vs. Korea Information Communications |
| Shinil Electronics vs. Daou Data Corp | Shinil Electronics vs. Solution Advanced Technology | Shinil Electronics vs. Busan Industrial Co | Shinil Electronics vs. Busan Ind |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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