Correlation Between Miwon Chemical and KB No4
Can any of the company-specific risk be diversified away by investing in both Miwon Chemical and KB No4 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 KB No4 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miwon Chemical and KB No4 SPAC, you can compare the effects of market volatilities on Miwon Chemical and KB No4 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 KB No4. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miwon Chemical and KB No4.
Diversification Opportunities for Miwon Chemical and KB No4
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Miwon and 205500 is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Miwon Chemical and KB No4 SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB No4 SPAC 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 KB No4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB No4 SPAC has no effect on the direction of Miwon Chemical i.e., Miwon Chemical and KB No4 go up and down completely randomly.
Pair Corralation between Miwon Chemical and KB No4
Assuming the 90 days trading horizon Miwon Chemical is expected to generate 0.56 times more return on investment than KB No4. However, Miwon Chemical is 1.8 times less risky than KB No4. It trades about -0.08 of its potential returns per unit of risk. KB No4 SPAC is currently generating about -0.26 per unit of risk. If you would invest 7,990,000 in Miwon Chemical on September 1, 2024 and sell it today you would lose (140,000) from holding Miwon Chemical or give up 1.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Miwon Chemical vs. KB No4 SPAC
Performance |
| Timeline |
| Miwon Chemical |
| KB No4 SPAC |
Miwon Chemical and KB No4 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miwon Chemical and KB No4
The main advantage of trading using opposite Miwon Chemical and KB No4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miwon Chemical position performs unexpectedly, KB No4 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 KB No4 will offset losses from the drop in KB No4's long position.The idea behind Miwon Chemical and KB No4 SPAC 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.| KB No4 vs. Kukdo Chemical Co | KB No4 vs. CU Tech Corp | KB No4 vs. Youngchang Chemical Co | KB No4 vs. Miwon 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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