Correlation Between KPX Green and Miwon Chemical
Can any of the company-specific risk be diversified away by investing in both KPX Green and Miwon Chemical 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 Miwon Chemical 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 Miwon Chemical, you can compare the effects of market volatilities on KPX Green and Miwon Chemical 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 Miwon Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of KPX Green and Miwon Chemical.
Diversification Opportunities for KPX Green and Miwon Chemical
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between KPX and Miwon is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding KPX Green Chemical and Miwon Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miwon Chemical 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 Miwon Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miwon Chemical has no effect on the direction of KPX Green i.e., KPX Green and Miwon Chemical go up and down completely randomly.
Pair Corralation between KPX Green and Miwon Chemical
Assuming the 90 days trading horizon KPX Green Chemical is expected to under-perform the Miwon Chemical. In addition to that, KPX Green is 6.68 times more volatile than Miwon Chemical. It trades about -0.08 of its total potential returns per unit of risk. Miwon Chemical is currently generating about -0.06 per unit of volatility. If you would invest 7,860,000 in Miwon Chemical on November 4, 2024 and sell it today you would lose (60,000) from holding Miwon Chemical or give up 0.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KPX Green Chemical vs. Miwon Chemical
Performance |
| Timeline |
| KPX Green Chemical |
| Miwon Chemical |
KPX Green and Miwon Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KPX Green and Miwon Chemical
The main advantage of trading using opposite KPX Green and Miwon Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KPX Green position performs unexpectedly, Miwon Chemical 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 Miwon Chemical will offset losses from the drop in Miwon Chemical'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 |
| Miwon Chemical vs. Youngchang Chemical Co | Miwon Chemical vs. Hanwha Chemical Corp | Miwon Chemical vs. Kukdong Oil Chemicals | Miwon Chemical vs. Narae Nanotech Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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