Correlation Between Kyung Chang and Korea Computer
Can any of the company-specific risk be diversified away by investing in both Kyung Chang and Korea Computer 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 Korea Computer 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 Korea Computer, you can compare the effects of market volatilities on Kyung Chang and Korea Computer 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 Korea Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kyung Chang and Korea Computer.
Diversification Opportunities for Kyung Chang and Korea Computer
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kyung and Korea is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Kyung Chang Industrial and Korea Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Computer 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 Korea Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Computer has no effect on the direction of Kyung Chang i.e., Kyung Chang and Korea Computer go up and down completely randomly.
Pair Corralation between Kyung Chang and Korea Computer
Assuming the 90 days trading horizon Kyung Chang is expected to generate 82.37 times less return on investment than Korea Computer. But when comparing it to its historical volatility, Kyung Chang Industrial is 1.65 times less risky than Korea Computer. It trades about 0.0 of its potential returns per unit of risk. Korea Computer is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 492,500 in Korea Computer on September 13, 2024 and sell it today you would earn a total of 29,500 from holding Korea Computer or generate 5.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kyung Chang Industrial vs. Korea Computer
Performance |
| Timeline |
| Kyung Chang Industrial |
| Korea Computer |
Kyung Chang and Korea Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kyung Chang and Korea Computer
The main advantage of trading using opposite Kyung Chang and Korea Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kyung Chang position performs unexpectedly, Korea Computer 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 Korea Computer will offset losses from the drop in Korea Computer's long position.| Kyung Chang vs. Sewoon Medical Co | Kyung Chang vs. WONIK Materials CoLtd | Kyung Chang vs. Ssangyong Materials Corp | Kyung Chang vs. Kisan Telecom Co |
| Korea Computer vs. Cube Entertainment | Korea Computer vs. Dreamus Company | Korea Computer vs. LG Energy Solution | Korea Computer vs. Dongwon System |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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