Correlation Between Sewoon Medical and KPX Chemical
Can any of the company-specific risk be diversified away by investing in both Sewoon Medical and KPX 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 Sewoon Medical and KPX Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sewoon Medical Co and KPX Chemical, you can compare the effects of market volatilities on Sewoon Medical and KPX 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 Sewoon Medical with a short position of KPX Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sewoon Medical and KPX Chemical.
Diversification Opportunities for Sewoon Medical and KPX Chemical
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sewoon and KPX is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Sewoon Medical Co and KPX Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPX Chemical and Sewoon Medical 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 Sewoon Medical Co are associated (or correlated) with KPX Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPX Chemical has no effect on the direction of Sewoon Medical i.e., Sewoon Medical and KPX Chemical go up and down completely randomly.
Pair Corralation between Sewoon Medical and KPX Chemical
Assuming the 90 days trading horizon Sewoon Medical Co is expected to under-perform the KPX Chemical. In addition to that, Sewoon Medical is 2.0 times more volatile than KPX Chemical. It trades about -0.02 of its total potential returns per unit of risk. KPX Chemical is currently generating about 0.04 per unit of volatility. If you would invest 4,156,676 in KPX Chemical on September 14, 2024 and sell it today you would earn a total of 298,324 from holding KPX Chemical or generate 7.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sewoon Medical Co vs. KPX Chemical
Performance |
| Timeline |
| Sewoon Medical |
| KPX Chemical |
Sewoon Medical and KPX Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sewoon Medical and KPX Chemical
The main advantage of trading using opposite Sewoon Medical and KPX Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sewoon Medical position performs unexpectedly, KPX 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 KPX Chemical will offset losses from the drop in KPX Chemical's long position.| Sewoon Medical vs. Samsung Electronics Co | Sewoon Medical vs. Samsung Electronics Co | Sewoon Medical vs. SK Hynix | Sewoon Medical vs. SK Holdings Co |
| KPX Chemical vs. Formetal Co | KPX Chemical vs. Songwon Industrial Co | KPX Chemical vs. Digital Power Communications | KPX Chemical vs. Dongwon Metal Co |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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