Correlation Between Kwang Jin and Wonil Special
Can any of the company-specific risk be diversified away by investing in both Kwang Jin and Wonil Special 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 Kwang Jin and Wonil Special into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kwang Jin Ind and Wonil Special Steel, you can compare the effects of market volatilities on Kwang Jin and Wonil Special 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 Kwang Jin with a short position of Wonil Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kwang Jin and Wonil Special.
Diversification Opportunities for Kwang Jin and Wonil Special
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kwang and Wonil is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kwang Jin Ind and Wonil Special Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonil Special Steel and Kwang Jin 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 Kwang Jin Ind are associated (or correlated) with Wonil Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonil Special Steel has no effect on the direction of Kwang Jin i.e., Kwang Jin and Wonil Special go up and down completely randomly.
Pair Corralation between Kwang Jin and Wonil Special
Assuming the 90 days trading horizon Kwang Jin Ind is expected to under-perform the Wonil Special. In addition to that, Kwang Jin is 2.28 times more volatile than Wonil Special Steel. It trades about -0.06 of its total potential returns per unit of risk. Wonil Special Steel is currently generating about -0.04 per unit of volatility. If you would invest 862,000 in Wonil Special Steel on September 26, 2024 and sell it today you would lose (137,000) from holding Wonil Special Steel or give up 15.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kwang Jin Ind vs. Wonil Special Steel
Performance |
| Timeline |
| Kwang Jin Ind |
| Wonil Special Steel |
Kwang Jin and Wonil Special Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kwang Jin and Wonil Special
The main advantage of trading using opposite Kwang Jin and Wonil Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kwang Jin position performs unexpectedly, Wonil Special 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 Wonil Special will offset losses from the drop in Wonil Special's long position.| Kwang Jin vs. Wonil Special Steel | Kwang Jin vs. Bookook Steel | Kwang Jin vs. Kyeryong Construction Industrial | Kwang Jin vs. Hironic Co |
| Wonil Special vs. Ssangyong Information Communication | Wonil Special vs. SK Telecom Co | Wonil Special vs. Bookook Steel | Wonil Special vs. Daedong Steel 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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