Correlation Between Miwon Chemical and Korea Computer
Can any of the company-specific risk be diversified away by investing in both Miwon Chemical and Korea Computer 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 Korea Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miwon Chemical and Korea Computer Terminal, you can compare the effects of market volatilities on Miwon Chemical and Korea Computer 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 Korea Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miwon Chemical and Korea Computer.
Diversification Opportunities for Miwon Chemical and Korea Computer
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Miwon and Korea is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Miwon Chemical and Korea Computer Terminal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Computer Terminal 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 Korea Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Computer Terminal has no effect on the direction of Miwon Chemical i.e., Miwon Chemical and Korea Computer go up and down completely randomly.
Pair Corralation between Miwon Chemical and Korea Computer
Assuming the 90 days trading horizon Miwon Chemical is expected to under-perform the Korea Computer. But the stock apears to be less risky and, when comparing its historical volatility, Miwon Chemical is 5.86 times less risky than Korea Computer. The stock trades about -0.04 of its potential returns per unit of risk. The Korea Computer Terminal is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 228,500 in Korea Computer Terminal on August 30, 2024 and sell it today you would earn a total of 18,000 from holding Korea Computer Terminal or generate 7.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Miwon Chemical vs. Korea Computer Terminal
Performance |
| Timeline |
| Miwon Chemical |
| Korea Computer Terminal |
Miwon Chemical and Korea Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miwon Chemical and Korea Computer
The main advantage of trading using opposite Miwon Chemical and Korea Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miwon Chemical position performs unexpectedly, Korea Computer 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 Korea Computer will offset losses from the drop in Korea Computer's long position.The idea behind Miwon Chemical and Korea Computer Terminal 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.| Korea Computer vs. Sung Bo Chemicals | Korea Computer vs. Youngbo Chemical Co | Korea Computer vs. Miwon Chemical | Korea Computer 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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