Correlation Between Nature and KG Eco
Can any of the company-specific risk be diversified away by investing in both Nature and KG Eco 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 Nature and KG Eco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nature and Environment and KG Eco Technology, you can compare the effects of market volatilities on Nature and KG Eco 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 Nature with a short position of KG Eco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nature and KG Eco.
Diversification Opportunities for Nature and KG Eco
Very weak diversification
The 3 months correlation between Nature and 151860 is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Nature and Environment and KG Eco Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KG Eco Technology and Nature 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 Nature and Environment are associated (or correlated) with KG Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KG Eco Technology has no effect on the direction of Nature i.e., Nature and KG Eco go up and down completely randomly.
Pair Corralation between Nature and KG Eco
Assuming the 90 days trading horizon Nature and Environment is expected to under-perform the KG Eco. But the stock apears to be less risky and, when comparing its historical volatility, Nature and Environment is 1.11 times less risky than KG Eco. The stock trades about -0.01 of its potential returns per unit of risk. The KG Eco Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 497,548 in KG Eco Technology on October 30, 2024 and sell it today you would earn a total of 2,452 from holding KG Eco Technology or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nature and Environment vs. KG Eco Technology
Performance |
| Timeline |
| Nature and Environment |
| KG Eco Technology |
Nature and KG Eco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nature and KG Eco
The main advantage of trading using opposite Nature and KG Eco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nature position performs unexpectedly, KG Eco 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 KG Eco will offset losses from the drop in KG Eco's long position.| Nature vs. Samsung Electronics Co | Nature vs. Samsung Electronics Co | Nature vs. KB Financial Group | Nature vs. Shinhan Financial Group |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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