Correlation Between Display Tech and Kolon Plastics
Can any of the company-specific risk be diversified away by investing in both Display Tech and Kolon Plastics 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 Display Tech and Kolon Plastics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Display Tech Co and Kolon Plastics, you can compare the effects of market volatilities on Display Tech and Kolon Plastics 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 Display Tech with a short position of Kolon Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Display Tech and Kolon Plastics.
Diversification Opportunities for Display Tech and Kolon Plastics
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Display and Kolon is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Display Tech Co and Kolon Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kolon Plastics and Display Tech 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 Display Tech Co are associated (or correlated) with Kolon Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kolon Plastics has no effect on the direction of Display Tech i.e., Display Tech and Kolon Plastics go up and down completely randomly.
Pair Corralation between Display Tech and Kolon Plastics
Assuming the 90 days trading horizon Display Tech Co is expected to generate 0.96 times more return on investment than Kolon Plastics. However, Display Tech Co is 1.04 times less risky than Kolon Plastics. It trades about 0.19 of its potential returns per unit of risk. Kolon Plastics is currently generating about -0.04 per unit of risk. If you would invest 288,500 in Display Tech Co on October 25, 2024 and sell it today you would earn a total of 17,000 from holding Display Tech Co or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Display Tech Co vs. Kolon Plastics
Performance |
| Timeline |
| Display Tech |
| Kolon Plastics |
Display Tech and Kolon Plastics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Display Tech and Kolon Plastics
The main advantage of trading using opposite Display Tech and Kolon Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Display Tech position performs unexpectedly, Kolon Plastics 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 Kolon Plastics will offset losses from the drop in Kolon Plastics' long position.| Display Tech vs. TK Chemical | Display Tech vs. Automobile Pc | Display Tech vs. Namhae Chemical | Display Tech vs. Youngbo Chemical Co |
| Kolon Plastics vs. Atinum Investment Co | Kolon Plastics vs. Korea Investment Holdings | Kolon Plastics vs. DB Financial Investment | Kolon Plastics vs. SV Investment |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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