Correlation Between Kukil Metal and Korea Information
Can any of the company-specific risk be diversified away by investing in both Kukil Metal and Korea Information 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 Kukil Metal and Korea Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kukil Metal Co and Korea Information Engineering, you can compare the effects of market volatilities on Kukil Metal and Korea Information 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 Kukil Metal with a short position of Korea Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukil Metal and Korea Information.
Diversification Opportunities for Kukil Metal and Korea Information
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kukil and Korea is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kukil Metal Co and Korea Information Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information and Kukil Metal 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 Kukil Metal Co are associated (or correlated) with Korea Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of Kukil Metal i.e., Kukil Metal and Korea Information go up and down completely randomly.
Pair Corralation between Kukil Metal and Korea Information
Assuming the 90 days trading horizon Kukil Metal Co is expected to generate 0.81 times more return on investment than Korea Information. However, Kukil Metal Co is 1.23 times less risky than Korea Information. It trades about -0.05 of its potential returns per unit of risk. Korea Information Engineering is currently generating about -0.05 per unit of risk. If you would invest 251,000 in Kukil Metal Co on August 31, 2024 and sell it today you would lose (75,000) from holding Kukil Metal Co or give up 29.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kukil Metal Co vs. Korea Information Engineering
Performance |
| Timeline |
| Kukil Metal |
| Korea Information |
Kukil Metal and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukil Metal and Korea Information
The main advantage of trading using opposite Kukil Metal and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukil Metal position performs unexpectedly, Korea Information 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 Korea Information will offset losses from the drop in Korea Information's long position.| Kukil Metal vs. INFINITT Healthcare Co | Kukil Metal vs. CKH Food Health | Kukil Metal vs. Asiana Airlines | Kukil Metal vs. POSCO M TECH Co |
| Korea Information vs. Woorim Machinery Co | Korea Information vs. Seohee Construction Co | Korea Information vs. Pyung Hwa Industrial | Korea Information vs. Kukil Metal Co |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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