Correlation Between Kyung Chang and UIL
Can any of the company-specific risk be diversified away by investing in both Kyung Chang and UIL 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 UIL 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 UIL Co, you can compare the effects of market volatilities on Kyung Chang and UIL 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 UIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kyung Chang and UIL.
Diversification Opportunities for Kyung Chang and UIL
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kyung and UIL is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kyung Chang Industrial and UIL Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UIL Co 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 UIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UIL Co has no effect on the direction of Kyung Chang i.e., Kyung Chang and UIL go up and down completely randomly.
Pair Corralation between Kyung Chang and UIL
Assuming the 90 days trading horizon Kyung Chang Industrial is expected to under-perform the UIL. But the stock apears to be less risky and, when comparing its historical volatility, Kyung Chang Industrial is 1.3 times less risky than UIL. The stock trades about -0.11 of its potential returns per unit of risk. The UIL Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 539,000 in UIL Co on September 12, 2024 and sell it today you would lose (57,000) from holding UIL Co or give up 10.58% 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. UIL Co
Performance |
| Timeline |
| Kyung Chang Industrial |
| UIL Co |
Kyung Chang and UIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kyung Chang and UIL
The main advantage of trading using opposite Kyung Chang and UIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kyung Chang position performs unexpectedly, UIL 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 UIL will offset losses from the drop in UIL's 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 |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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