Correlation Between Formetal and Kyeryong Construction
Can any of the company-specific risk be diversified away by investing in both Formetal and Kyeryong Construction 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 Formetal and Kyeryong Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formetal Co and Kyeryong Construction Industrial, you can compare the effects of market volatilities on Formetal and Kyeryong Construction 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 Formetal with a short position of Kyeryong Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formetal and Kyeryong Construction.
Diversification Opportunities for Formetal and Kyeryong Construction
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Formetal and Kyeryong is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Formetal Co and Kyeryong Construction Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyeryong Construction and Formetal 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 Formetal Co are associated (or correlated) with Kyeryong Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyeryong Construction has no effect on the direction of Formetal i.e., Formetal and Kyeryong Construction go up and down completely randomly.
Pair Corralation between Formetal and Kyeryong Construction
Assuming the 90 days trading horizon Formetal Co is expected to generate 1.88 times more return on investment than Kyeryong Construction. However, Formetal is 1.88 times more volatile than Kyeryong Construction Industrial. It trades about -0.01 of its potential returns per unit of risk. Kyeryong Construction Industrial is currently generating about -0.06 per unit of risk. If you would invest 320,500 in Formetal Co on September 21, 2024 and sell it today you would lose (24,000) from holding Formetal Co or give up 7.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formetal Co vs. Kyeryong Construction Industri
Performance |
| Timeline |
| Formetal |
| Kyeryong Construction |
Formetal and Kyeryong Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formetal and Kyeryong Construction
The main advantage of trading using opposite Formetal and Kyeryong Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formetal position performs unexpectedly, Kyeryong Construction 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 Kyeryong Construction will offset losses from the drop in Kyeryong Construction's long position.| Formetal vs. Rainbow Robotics | Formetal vs. COWINTECH Co | Formetal vs. CS BEARING CoLtd | Formetal vs. Young Poong Precision |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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