Correlation Between Kwang Jin and Keum Kang
Can any of the company-specific risk be diversified away by investing in both Kwang Jin and Keum Kang 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 Keum Kang 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 Keum Kang Steel, you can compare the effects of market volatilities on Kwang Jin and Keum Kang 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 Keum Kang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kwang Jin and Keum Kang.
Diversification Opportunities for Kwang Jin and Keum Kang
Very poor diversification
The 3 months correlation between Kwang and Keum is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Kwang Jin Ind and Keum Kang Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keum Kang 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 Keum Kang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keum Kang Steel has no effect on the direction of Kwang Jin i.e., Kwang Jin and Keum Kang go up and down completely randomly.
Pair Corralation between Kwang Jin and Keum Kang
Assuming the 90 days trading horizon Kwang Jin Ind is expected to generate 0.89 times more return on investment than Keum Kang. However, Kwang Jin Ind is 1.12 times less risky than Keum Kang. It trades about 0.11 of its potential returns per unit of risk. Keum Kang Steel is currently generating about -0.14 per unit of risk. If you would invest 195,400 in Kwang Jin Ind on September 25, 2024 and sell it today you would earn a total of 7,600 from holding Kwang Jin Ind or generate 3.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Kwang Jin Ind vs. Keum Kang Steel
Performance |
| Timeline |
| Kwang Jin Ind |
| Keum Kang Steel |
Kwang Jin and Keum Kang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kwang Jin and Keum Kang
The main advantage of trading using opposite Kwang Jin and Keum Kang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kwang Jin position performs unexpectedly, Keum Kang 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 Keum Kang will offset losses from the drop in Keum Kang's long position.| Kwang Jin vs. Keum Kang Steel | Kwang Jin vs. Tplex Co | Kwang Jin vs. PJ Metal Co | Kwang Jin vs. Samhyun Steel Co |
| Keum Kang vs. ABOV Semiconductor Co | Keum Kang vs. Jinro Distillers Co | Keum Kang vs. KIWI Media Group | Keum Kang vs. FOODWELL 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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