Correlation Between Kyung Chang and HANA Micron
Can any of the company-specific risk be diversified away by investing in both Kyung Chang and HANA Micron 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 HANA Micron 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 HANA Micron, you can compare the effects of market volatilities on Kyung Chang and HANA Micron 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 HANA Micron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kyung Chang and HANA Micron.
Diversification Opportunities for Kyung Chang and HANA Micron
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kyung and HANA is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Kyung Chang Industrial and HANA Micron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANA Micron 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 HANA Micron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANA Micron has no effect on the direction of Kyung Chang i.e., Kyung Chang and HANA Micron go up and down completely randomly.
Pair Corralation between Kyung Chang and HANA Micron
Assuming the 90 days trading horizon Kyung Chang Industrial is expected to generate 0.99 times more return on investment than HANA Micron. However, Kyung Chang Industrial is 1.01 times less risky than HANA Micron. It trades about 0.0 of its potential returns per unit of risk. HANA Micron is currently generating about -0.09 per unit of risk. If you would invest 230,500 in Kyung Chang Industrial on September 4, 2024 and sell it today you would lose (34,800) from holding Kyung Chang Industrial or give up 15.1% 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. HANA Micron
Performance |
| Timeline |
| Kyung Chang Industrial |
| HANA Micron |
Kyung Chang and HANA Micron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kyung Chang and HANA Micron
The main advantage of trading using opposite Kyung Chang and HANA Micron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kyung Chang position performs unexpectedly, HANA Micron 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 HANA Micron will offset losses from the drop in HANA Micron's long position.| Kyung Chang vs. Shinil Electronics Co | Kyung Chang vs. Korean Reinsurance Co | Kyung Chang vs. Daejoo Electronic Materials | Kyung Chang vs. Samyoung Electronics Co |
| HANA Micron vs. FOODWELL Co | HANA Micron vs. Sam Yang Foods | HANA Micron vs. Pureun Mutual Savings | HANA Micron vs. Sempio Foods Co |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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