Correlation Between Korea Investment and KPX Green
Can any of the company-specific risk be diversified away by investing in both Korea Investment 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 Korea Investment and KPX Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Investment Holdings and KPX Green Chemical, you can compare the effects of market volatilities on Korea Investment 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 Korea Investment with a short position of KPX Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Investment and KPX Green.
Diversification Opportunities for Korea Investment and KPX Green
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and KPX is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Korea Investment Holdings 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 Korea Investment 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 Korea Investment Holdings 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 Korea Investment i.e., Korea Investment and KPX Green go up and down completely randomly.
Pair Corralation between Korea Investment and KPX Green
Assuming the 90 days trading horizon Korea Investment is expected to generate 115.5 times less return on investment than KPX Green. But when comparing it to its historical volatility, Korea Investment Holdings is 2.72 times less risky than KPX Green. It trades about 0.01 of its potential returns per unit of risk. KPX Green Chemical is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 495,000 in KPX Green Chemical on September 26, 2024 and sell it today you would earn a total of 156,000 from holding KPX Green Chemical or generate 31.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Investment Holdings vs. KPX Green Chemical
Performance |
| Timeline |
| Korea Investment Holdings |
| KPX Green Chemical |
Korea Investment and KPX Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Investment and KPX Green
The main advantage of trading using opposite Korea Investment and KPX Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Investment 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.| Korea Investment vs. AptaBio Therapeutics | Korea Investment vs. Wonbang Tech Co | Korea Investment vs. Busan Industrial Co | Korea Investment vs. Busan Ind |
| KPX Green vs. Koryo Credit Information | KPX Green vs. Moadata Co | KPX Green vs. PlayD Co | KPX Green vs. LG Display 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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