Correlation Between Microfriend and Kumho Industrial
Can any of the company-specific risk be diversified away by investing in both Microfriend and Kumho Industrial 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 Microfriend and Kumho Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microfriend and Kumho Industrial Co, you can compare the effects of market volatilities on Microfriend and Kumho Industrial 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 Microfriend with a short position of Kumho Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microfriend and Kumho Industrial.
Diversification Opportunities for Microfriend and Kumho Industrial
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microfriend and Kumho is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Microfriend and Kumho Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho Industrial and Microfriend 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 Microfriend are associated (or correlated) with Kumho Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Industrial has no effect on the direction of Microfriend i.e., Microfriend and Kumho Industrial go up and down completely randomly.
Pair Corralation between Microfriend and Kumho Industrial
Assuming the 90 days trading horizon Microfriend is expected to under-perform the Kumho Industrial. In addition to that, Microfriend is 1.43 times more volatile than Kumho Industrial Co. It trades about -0.21 of its total potential returns per unit of risk. Kumho Industrial Co is currently generating about 0.12 per unit of volatility. If you would invest 289,500 in Kumho Industrial Co on August 30, 2024 and sell it today you would earn a total of 23,000 from holding Kumho Industrial Co or generate 7.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microfriend vs. Kumho Industrial Co
Performance |
| Timeline |
| Microfriend |
| Kumho Industrial |
Microfriend and Kumho Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microfriend and Kumho Industrial
The main advantage of trading using opposite Microfriend and Kumho Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microfriend position performs unexpectedly, Kumho Industrial 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 Kumho Industrial will offset losses from the drop in Kumho Industrial's long position.| Microfriend vs. SK Hynix | Microfriend vs. LX Semicon Co | Microfriend vs. People Technology | Microfriend vs. SIMMTECH Co |
| Kumho Industrial vs. AptaBio Therapeutics | Kumho Industrial vs. Daewoo SBI SPAC | Kumho Industrial vs. Dream Security co | Kumho Industrial vs. Microfriend |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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