Correlation Between Koryo Credit and Tae Kyung

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Can any of the company-specific risk be diversified away by investing in both Koryo Credit and Tae Kyung 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 Koryo Credit and Tae Kyung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koryo Credit Information and Tae Kyung Chemical, you can compare the effects of market volatilities on Koryo Credit and Tae Kyung 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 Koryo Credit with a short position of Tae Kyung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koryo Credit and Tae Kyung.

Diversification Opportunities for Koryo Credit and Tae Kyung

0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between Koryo and Tae is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Koryo Credit Information and Tae Kyung Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tae Kyung Chemical and Koryo Credit 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 Koryo Credit Information are associated (or correlated) with Tae Kyung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tae Kyung Chemical has no effect on the direction of Koryo Credit i.e., Koryo Credit and Tae Kyung go up and down completely randomly.

Pair Corralation between Koryo Credit and Tae Kyung

Assuming the 90 days trading horizon Koryo Credit Information is expected to generate 0.95 times more return on investment than Tae Kyung. However, Koryo Credit Information is 1.06 times less risky than Tae Kyung. It trades about 0.05 of its potential returns per unit of risk. Tae Kyung Chemical is currently generating about 0.01 per unit of risk. If you would invest  989,000  in Koryo Credit Information on August 28, 2024 and sell it today you would earn a total of  13,000  from holding Koryo Credit Information or generate 1.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Koryo Credit Information  vs.  Tae Kyung Chemical

 Performance 
       Timeline  
Koryo Credit Information 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Koryo Credit Information has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Koryo Credit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Tae Kyung Chemical 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Tae Kyung Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Tae Kyung is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Koryo Credit and Tae Kyung Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Koryo Credit and Tae Kyung

The main advantage of trading using opposite Koryo Credit and Tae Kyung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koryo Credit position performs unexpectedly, Tae Kyung 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 Tae Kyung will offset losses from the drop in Tae Kyung's long position.
The idea behind Koryo Credit Information and Tae Kyung Chemical pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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