Correlation Between Korea Information and Keyang Electric
Can any of the company-specific risk be diversified away by investing in both Korea Information and Keyang Electric 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 Korea Information and Keyang Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Information Engineering and Keyang Electric Machinery, you can compare the effects of market volatilities on Korea Information and Keyang Electric 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 Korea Information with a short position of Keyang Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Keyang Electric.
Diversification Opportunities for Korea Information and Keyang Electric
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Korea and Keyang is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Engineering and Keyang Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyang Electric Machinery and Korea Information 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 Korea Information Engineering are associated (or correlated) with Keyang Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyang Electric Machinery has no effect on the direction of Korea Information i.e., Korea Information and Keyang Electric go up and down completely randomly.
Pair Corralation between Korea Information and Keyang Electric
Assuming the 90 days trading horizon Korea Information Engineering is expected to under-perform the Keyang Electric. But the stock apears to be less risky and, when comparing its historical volatility, Korea Information Engineering is 1.03 times less risky than Keyang Electric. The stock trades about -0.08 of its potential returns per unit of risk. The Keyang Electric Machinery is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 350,000 in Keyang Electric Machinery on October 17, 2024 and sell it today you would earn a total of 59,000 from holding Keyang Electric Machinery or generate 16.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Engineering vs. Keyang Electric Machinery
Performance |
| Timeline |
| Korea Information |
| Keyang Electric Machinery |
Korea Information and Keyang Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Keyang Electric
The main advantage of trading using opposite Korea Information and Keyang Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, Keyang Electric 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 Keyang Electric will offset losses from the drop in Keyang Electric's long position.| Korea Information vs. Top Material Co | Korea Information vs. Phoenix Materials Co | Korea Information vs. Ecoplastic | Korea Information vs. Yura Tech Co |
| Keyang Electric vs. Insun Environment New | Keyang Electric vs. Han Kook Steel | Keyang Electric vs. INSUN Environmental New | Keyang Electric vs. Moonbae Steel |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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