Correlation Between Alton Sports and Kukdo Chemical
Can any of the company-specific risk be diversified away by investing in both Alton Sports and Kukdo 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 Alton Sports and Kukdo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alton Sports CoLtd and Kukdo Chemical Co, you can compare the effects of market volatilities on Alton Sports and Kukdo 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 Alton Sports with a short position of Kukdo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alton Sports and Kukdo Chemical.
Diversification Opportunities for Alton Sports and Kukdo Chemical
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alton and Kukdo is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Alton Sports CoLtd and Kukdo Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukdo Chemical and Alton Sports 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 Alton Sports CoLtd are associated (or correlated) with Kukdo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukdo Chemical has no effect on the direction of Alton Sports i.e., Alton Sports and Kukdo Chemical go up and down completely randomly.
Pair Corralation between Alton Sports and Kukdo Chemical
Assuming the 90 days trading horizon Alton Sports CoLtd is expected to generate 0.78 times more return on investment than Kukdo Chemical. However, Alton Sports CoLtd is 1.28 times less risky than Kukdo Chemical. It trades about -0.27 of its potential returns per unit of risk. Kukdo Chemical Co is currently generating about -0.22 per unit of risk. If you would invest 159,900 in Alton Sports CoLtd on August 31, 2024 and sell it today you would lose (11,800) from holding Alton Sports CoLtd or give up 7.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alton Sports CoLtd vs. Kukdo Chemical Co
Performance |
| Timeline |
| Alton Sports CoLtd |
| Kukdo Chemical |
Alton Sports and Kukdo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alton Sports and Kukdo Chemical
The main advantage of trading using opposite Alton Sports and Kukdo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alton Sports position performs unexpectedly, Kukdo 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 Kukdo Chemical will offset losses from the drop in Kukdo Chemical's long position.| Alton Sports vs. LG Display | Alton Sports vs. Hyundai Motor | Alton Sports vs. Hyundai Motor Co | Alton Sports vs. Hyundai Motor Co |
| Kukdo Chemical vs. Kukdo Chemical | Kukdo Chemical vs. Korea Refract | Kukdo Chemical vs. Korea Refractories Co | Kukdo Chemical vs. Shinhan Inverse WTI |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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