Correlation Between Kyung Chang and FarmStory
Can any of the company-specific risk be diversified away by investing in both Kyung Chang and FarmStory 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 FarmStory 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 FarmStory Co, you can compare the effects of market volatilities on Kyung Chang and FarmStory 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 FarmStory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kyung Chang and FarmStory.
Diversification Opportunities for Kyung Chang and FarmStory
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kyung and FarmStory is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Kyung Chang Industrial and FarmStory Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FarmStory 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 FarmStory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FarmStory has no effect on the direction of Kyung Chang i.e., Kyung Chang and FarmStory go up and down completely randomly.
Pair Corralation between Kyung Chang and FarmStory
Assuming the 90 days trading horizon Kyung Chang Industrial is expected to generate 1.45 times more return on investment than FarmStory. However, Kyung Chang is 1.45 times more volatile than FarmStory Co. It trades about 0.01 of its potential returns per unit of risk. FarmStory Co is currently generating about -0.03 per unit of risk. If you would invest 209,000 in Kyung Chang Industrial on August 29, 2024 and sell it today you would lose (5,000) from holding Kyung Chang Industrial or give up 2.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kyung Chang Industrial vs. FarmStory Co
Performance |
| Timeline |
| Kyung Chang Industrial |
| FarmStory |
Kyung Chang and FarmStory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kyung Chang and FarmStory
The main advantage of trading using opposite Kyung Chang and FarmStory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kyung Chang position performs unexpectedly, FarmStory 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 FarmStory will offset losses from the drop in FarmStory's long position.| Kyung Chang vs. Kisan Telecom Co | Kyung Chang vs. Seohee Construction Co | Kyung Chang vs. Nable Communications | Kyung Chang vs. Hanshin Construction Co |
| FarmStory vs. Samsung Electronics Co | FarmStory vs. Samsung Electronics Co | FarmStory vs. Hyundai Motor Co | FarmStory vs. Hyundai Motor |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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