Correlation Between System and KPX Green
Can any of the company-specific risk be diversified away by investing in both System and KPX Green 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 System and KPX Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between System and Application and KPX Green Chemical, you can compare the effects of market volatilities on System and KPX Green 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 System with a short position of KPX Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of System and KPX Green.
Diversification Opportunities for System and KPX Green
Poor diversification
The 3 months correlation between System and KPX is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding System and Application and KPX Green Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPX Green Chemical and System 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 System and Application are associated (or correlated) with KPX Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPX Green Chemical has no effect on the direction of System i.e., System and KPX Green go up and down completely randomly.
Pair Corralation between System and KPX Green
Assuming the 90 days trading horizon System and Application is expected to generate 0.54 times more return on investment than KPX Green. However, System and Application is 1.84 times less risky than KPX Green. It trades about 0.05 of its potential returns per unit of risk. KPX Green Chemical is currently generating about -0.04 per unit of risk. If you would invest 153,500 in System and Application on October 31, 2024 and sell it today you would earn a total of 2,700 from holding System and Application or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
System and Application vs. KPX Green Chemical
Performance |
| Timeline |
| System and Application |
| KPX Green Chemical |
System and KPX Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with System and KPX Green
The main advantage of trading using opposite System and KPX Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if System position performs unexpectedly, KPX Green 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 KPX Green will offset losses from the drop in KPX Green's long position.| System vs. Kbi Metal Co | System vs. SEOJEON ELECTRIC MACHINERY | System vs. GS Retail Co | System vs. Tuksu Engineering ConstructionLtd |
| KPX Green vs. GS Retail Co | KPX Green vs. Kbi Metal Co | KPX Green vs. Daejung Chemicals Metals | KPX Green vs. Genie Music |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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