Correlation Between Koh Young and Miwon Chemical
Can any of the company-specific risk be diversified away by investing in both Koh Young 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 Koh Young and Miwon Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koh Young Technology and Miwon Chemical, you can compare the effects of market volatilities on Koh Young 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 Koh Young with a short position of Miwon Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koh Young and Miwon Chemical.
Diversification Opportunities for Koh Young and Miwon Chemical
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Koh and Miwon is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Koh Young Technology and Miwon Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miwon Chemical and Koh Young 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 Koh Young Technology 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 Koh Young i.e., Koh Young and Miwon Chemical go up and down completely randomly.
Pair Corralation between Koh Young and Miwon Chemical
Assuming the 90 days trading horizon Koh Young Technology is expected to generate 4.7 times more return on investment than Miwon Chemical. However, Koh Young is 4.7 times more volatile than Miwon Chemical. It trades about 0.13 of its potential returns per unit of risk. Miwon Chemical is currently generating about 0.01 per unit of risk. If you would invest 971,000 in Koh Young Technology on November 3, 2024 and sell it today you would earn a total of 664,000 from holding Koh Young Technology or generate 68.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Koh Young Technology vs. Miwon Chemical
Performance |
| Timeline |
| Koh Young Technology |
| Miwon Chemical |
Koh Young and Miwon Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koh Young and Miwon Chemical
The main advantage of trading using opposite Koh Young and Miwon Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koh Young 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.The idea behind Koh Young Technology and Miwon Chemical pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Miwon Chemical vs. Dongil Metal Co | Miwon Chemical vs. E Investment Development | Miwon Chemical vs. ABOV Semiconductor Co | Miwon Chemical vs. Stic Investments |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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