Correlation Between INSUN Environmental and Keyang Electric
Can any of the company-specific risk be diversified away by investing in both INSUN Environmental 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 INSUN Environmental and Keyang Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INSUN Environmental New and Keyang Electric Machinery, you can compare the effects of market volatilities on INSUN Environmental 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 INSUN Environmental with a short position of Keyang Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of INSUN Environmental and Keyang Electric.
Diversification Opportunities for INSUN Environmental and Keyang Electric
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INSUN and Keyang is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding INSUN Environmental New 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 INSUN Environmental 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 INSUN Environmental New 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 INSUN Environmental i.e., INSUN Environmental and Keyang Electric go up and down completely randomly.
Pair Corralation between INSUN Environmental and Keyang Electric
Assuming the 90 days trading horizon INSUN Environmental is expected to generate 1.76 times less return on investment than Keyang Electric. But when comparing it to its historical volatility, INSUN Environmental New is 1.78 times less risky than Keyang Electric. It trades about 0.32 of its potential returns per unit of risk. Keyang Electric Machinery is currently generating about 0.32 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INSUN Environmental New vs. Keyang Electric Machinery
Performance |
| Timeline |
| INSUN Environmental New |
| Keyang Electric Machinery |
INSUN Environmental and Keyang Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INSUN Environmental and Keyang Electric
The main advantage of trading using opposite INSUN Environmental and Keyang Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSUN Environmental 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.| INSUN Environmental vs. Korea Environment Technology | INSUN Environmental vs. Paradise Co | INSUN Environmental vs. Seoul Semiconductor Co | INSUN Environmental vs. JUSUNG ENGINEERING 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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