Correlation Between Union Materials and Kyung In
Can any of the company-specific risk be diversified away by investing in both Union Materials and Kyung In 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 Union Materials and Kyung In into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Materials Corp and Kyung In Synthetic Corp, you can compare the effects of market volatilities on Union Materials and Kyung In 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 Union Materials with a short position of Kyung In. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Materials and Kyung In.
Diversification Opportunities for Union Materials and Kyung In
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Union and Kyung is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Union Materials Corp and Kyung In Synthetic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyung In Synthetic and Union Materials 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 Union Materials Corp are associated (or correlated) with Kyung In. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyung In Synthetic has no effect on the direction of Union Materials i.e., Union Materials and Kyung In go up and down completely randomly.
Pair Corralation between Union Materials and Kyung In
Assuming the 90 days trading horizon Union Materials Corp is expected to generate 2.1 times more return on investment than Kyung In. However, Union Materials is 2.1 times more volatile than Kyung In Synthetic Corp. It trades about 0.12 of its potential returns per unit of risk. Kyung In Synthetic Corp is currently generating about 0.17 per unit of risk. If you would invest 217,000 in Union Materials Corp on October 31, 2024 and sell it today you would earn a total of 10,500 from holding Union Materials Corp or generate 4.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Materials Corp vs. Kyung In Synthetic Corp
Performance |
| Timeline |
| Union Materials Corp |
| Kyung In Synthetic |
Union Materials and Kyung In Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Materials and Kyung In
The main advantage of trading using opposite Union Materials and Kyung In positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Materials position performs unexpectedly, Kyung In 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 Kyung In will offset losses from the drop in Kyung In's long position.| Union Materials vs. Wave Electronics Co | Union Materials vs. Alton Sports CoLtd | Union Materials vs. Ssangyong Information Communication | Union Materials vs. Insung Information Co |
| Kyung In vs. LG Household Healthcare | Kyung In vs. Lotte Data Communication | Kyung In vs. Korea Information Engineering | Kyung In vs. Hannong Chemicals |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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