Correlation Between AeroSpace Technology and Kia Corp
Can any of the company-specific risk be diversified away by investing in both AeroSpace Technology and Kia Corp 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 AeroSpace Technology and Kia Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AeroSpace Technology of and Kia Corp, you can compare the effects of market volatilities on AeroSpace Technology and Kia Corp 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 AeroSpace Technology with a short position of Kia Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of AeroSpace Technology and Kia Corp.
Diversification Opportunities for AeroSpace Technology and Kia Corp
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between AeroSpace and Kia is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding AeroSpace Technology of and Kia Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kia Corp and AeroSpace Technology 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 AeroSpace Technology of are associated (or correlated) with Kia Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kia Corp has no effect on the direction of AeroSpace Technology i.e., AeroSpace Technology and Kia Corp go up and down completely randomly.
Pair Corralation between AeroSpace Technology and Kia Corp
Assuming the 90 days trading horizon AeroSpace Technology of is expected to generate 1.7 times more return on investment than Kia Corp. However, AeroSpace Technology is 1.7 times more volatile than Kia Corp. It trades about 0.67 of its potential returns per unit of risk. Kia Corp is currently generating about 0.09 per unit of risk. If you would invest 51,000 in AeroSpace Technology of on October 25, 2024 and sell it today you would earn a total of 20,100 from holding AeroSpace Technology of or generate 39.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AeroSpace Technology of vs. Kia Corp
Performance |
| Timeline |
| AeroSpace Technology |
| Kia Corp |
AeroSpace Technology and Kia Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AeroSpace Technology and Kia Corp
The main advantage of trading using opposite AeroSpace Technology and Kia Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AeroSpace Technology position performs unexpectedly, Kia Corp 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 Kia Corp will offset losses from the drop in Kia Corp's long position.| AeroSpace Technology vs. Samsung Electronics Co | AeroSpace Technology vs. Samsung Electronics Co | AeroSpace Technology vs. KB Financial Group | AeroSpace Technology vs. Shinhan Financial Group |
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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 Valuation module to check real value of public entities based on technical and fundamental data.
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