Correlation Between Techwing and KEPCO Engineering
Can any of the company-specific risk be diversified away by investing in both Techwing and KEPCO Engineering 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 Techwing and KEPCO Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Techwing and KEPCO Engineering Construction, you can compare the effects of market volatilities on Techwing and KEPCO Engineering 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 Techwing with a short position of KEPCO Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Techwing and KEPCO Engineering.
Diversification Opportunities for Techwing and KEPCO Engineering
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Techwing and KEPCO is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Techwing and KEPCO Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEPCO Engineering and Techwing 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 Techwing are associated (or correlated) with KEPCO Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEPCO Engineering has no effect on the direction of Techwing i.e., Techwing and KEPCO Engineering go up and down completely randomly.
Pair Corralation between Techwing and KEPCO Engineering
Assuming the 90 days trading horizon Techwing is expected to generate 1.6 times more return on investment than KEPCO Engineering. However, Techwing is 1.6 times more volatile than KEPCO Engineering Construction. It trades about 0.11 of its potential returns per unit of risk. KEPCO Engineering Construction is currently generating about -0.04 per unit of risk. If you would invest 3,850,000 in Techwing on October 14, 2024 and sell it today you would earn a total of 1,180,000 from holding Techwing or generate 30.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Techwing vs. KEPCO Engineering Construction
Performance |
| Timeline |
| Techwing |
| KEPCO Engineering |
Techwing and KEPCO Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Techwing and KEPCO Engineering
The main advantage of trading using opposite Techwing and KEPCO Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Techwing position performs unexpectedly, KEPCO Engineering 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 KEPCO Engineering will offset losses from the drop in KEPCO Engineering's long position.| Techwing vs. KEPCO Engineering Construction | Techwing vs. Hyundai Engineering Construction | Techwing vs. Semyung Electric Machinery | Techwing vs. MediaZen |
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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 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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