Correlation Between Miwon Chemical and Kia Corp
Can any of the company-specific risk be diversified away by investing in both Miwon Chemical and Kia Corp 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 Miwon Chemical and Kia Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miwon Chemical and Kia Corp, you can compare the effects of market volatilities on Miwon Chemical and Kia Corp 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 Miwon Chemical with a short position of Kia Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miwon Chemical and Kia Corp.
Diversification Opportunities for Miwon Chemical and Kia Corp
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Miwon and Kia is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Miwon Chemical and Kia Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kia Corp and Miwon Chemical 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 Miwon Chemical are associated (or correlated) with Kia Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kia Corp has no effect on the direction of Miwon Chemical i.e., Miwon Chemical and Kia Corp go up and down completely randomly.
Pair Corralation between Miwon Chemical and Kia Corp
Assuming the 90 days trading horizon Miwon Chemical is expected to generate 1.4 times less return on investment than Kia Corp. But when comparing it to its historical volatility, Miwon Chemical is 2.79 times less risky than Kia Corp. It trades about 0.07 of its potential returns per unit of risk. Kia Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 8,328,938 in Kia Corp on September 4, 2024 and sell it today you would earn a total of 1,091,062 from holding Kia Corp or generate 13.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Miwon Chemical vs. Kia Corp
Performance |
| Timeline |
| Miwon Chemical |
| Kia Corp |
Miwon Chemical and Kia Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miwon Chemical and Kia Corp
The main advantage of trading using opposite Miwon Chemical and Kia Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miwon Chemical position performs unexpectedly, Kia Corp 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 Kia Corp will offset losses from the drop in Kia Corp's long position.| Miwon Chemical vs. Cots Technology Co | Miwon Chemical vs. Koh Young Technology | Miwon Chemical vs. LG Household Healthcare | Miwon Chemical vs. HB Technology TD |
| Kia Corp vs. Youngbo Chemical Co | Kia Corp vs. BGF Retail Co | Kia Corp vs. Sung Bo Chemicals | Kia Corp vs. Youl Chon Chemical |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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