Correlation Between KPX Green and Korea Aerospace
Can any of the company-specific risk be diversified away by investing in both KPX Green and Korea Aerospace 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 KPX Green and Korea Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KPX Green Chemical and Korea Aerospace Industries, you can compare the effects of market volatilities on KPX Green and Korea Aerospace 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 KPX Green with a short position of Korea Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of KPX Green and Korea Aerospace.
Diversification Opportunities for KPX Green and Korea Aerospace
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KPX and Korea is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding KPX Green Chemical and Korea Aerospace Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Aerospace Indu and KPX Green 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 KPX Green Chemical are associated (or correlated) with Korea Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Aerospace Indu has no effect on the direction of KPX Green i.e., KPX Green and Korea Aerospace go up and down completely randomly.
Pair Corralation between KPX Green and Korea Aerospace
Assuming the 90 days trading horizon KPX Green Chemical is expected to generate 3.12 times more return on investment than Korea Aerospace. However, KPX Green is 3.12 times more volatile than Korea Aerospace Industries. It trades about -0.04 of its potential returns per unit of risk. Korea Aerospace Industries is currently generating about -0.17 per unit of risk. If you would invest 673,000 in KPX Green Chemical on November 3, 2024 and sell it today you would lose (33,000) from holding KPX Green Chemical or give up 4.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
KPX Green Chemical vs. Korea Aerospace Industries
Performance |
| Timeline |
| KPX Green Chemical |
| Korea Aerospace Indu |
KPX Green and Korea Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KPX Green and Korea Aerospace
The main advantage of trading using opposite KPX Green and Korea Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KPX Green position performs unexpectedly, Korea Aerospace 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 Aerospace will offset losses from the drop in Korea Aerospace's long position.| KPX Green vs. Asiana Airlines | KPX Green vs. Woori Technology Investment | KPX Green vs. Atinum Investment Co | KPX Green vs. Seoul Semiconductor Co |
| Korea Aerospace vs. Lotte Data Communication | Korea Aerospace vs. Daishin Information Communications | Korea Aerospace vs. Ssangyong Information Communication | Korea Aerospace vs. Automobile Pc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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