Correlation Between Ecopro and Keum Kang
Can any of the company-specific risk be diversified away by investing in both Ecopro and Keum Kang 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 Ecopro and Keum Kang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecopro Co and Keum Kang Steel, you can compare the effects of market volatilities on Ecopro and Keum Kang 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 Ecopro with a short position of Keum Kang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopro and Keum Kang.
Diversification Opportunities for Ecopro and Keum Kang
Poor diversification
The 3 months correlation between Ecopro and Keum is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ecopro Co and Keum Kang Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keum Kang Steel and Ecopro 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 Ecopro Co are associated (or correlated) with Keum Kang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keum Kang Steel has no effect on the direction of Ecopro i.e., Ecopro and Keum Kang go up and down completely randomly.
Pair Corralation between Ecopro and Keum Kang
Assuming the 90 days trading horizon Ecopro Co is expected to generate 1.22 times more return on investment than Keum Kang. However, Ecopro is 1.22 times more volatile than Keum Kang Steel. It trades about -0.02 of its potential returns per unit of risk. Keum Kang Steel is currently generating about -0.12 per unit of risk. If you would invest 8,240,000 in Ecopro Co on August 28, 2024 and sell it today you would lose (300,000) from holding Ecopro Co or give up 3.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecopro Co vs. Keum Kang Steel
Performance |
| Timeline |
| Ecopro |
| Keum Kang Steel |
Ecopro and Keum Kang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopro and Keum Kang
The main advantage of trading using opposite Ecopro and Keum Kang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopro position performs unexpectedly, Keum Kang 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 Keum Kang will offset losses from the drop in Keum Kang's long position.| Ecopro vs. LG Chemicals | Ecopro vs. Lotte Chemical Corp | Ecopro vs. Hyundai Steel | Ecopro vs. Seah Steel Corp |
| Keum Kang vs. LG Chemicals | Keum Kang vs. Lotte Chemical Corp | Keum Kang vs. Hyundai Steel | Keum Kang vs. Seah Steel 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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