Correlation Between KG Eco and Eagon Industrial
Can any of the company-specific risk be diversified away by investing in both KG Eco and Eagon 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 KG Eco and Eagon Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KG Eco Technology and Eagon Industrial Co, you can compare the effects of market volatilities on KG Eco and Eagon 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 KG Eco with a short position of Eagon Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of KG Eco and Eagon Industrial.
Diversification Opportunities for KG Eco and Eagon Industrial
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 151860 and Eagon is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding KG Eco Technology and Eagon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagon Industrial and KG Eco 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 KG Eco Technology are associated (or correlated) with Eagon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagon Industrial has no effect on the direction of KG Eco i.e., KG Eco and Eagon Industrial go up and down completely randomly.
Pair Corralation between KG Eco and Eagon Industrial
Assuming the 90 days trading horizon KG Eco is expected to generate 3.41 times less return on investment than Eagon Industrial. But when comparing it to its historical volatility, KG Eco Technology is 3.69 times less risky than Eagon Industrial. It trades about 0.12 of its potential returns per unit of risk. Eagon Industrial Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 508,038 in Eagon Industrial Co on October 25, 2024 and sell it today you would earn a total of 64,962 from holding Eagon Industrial Co or generate 12.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KG Eco Technology vs. Eagon Industrial Co
Performance |
| Timeline |
| KG Eco Technology |
| Eagon Industrial |
KG Eco and Eagon Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KG Eco and Eagon Industrial
The main advantage of trading using opposite KG Eco and Eagon Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KG Eco position performs unexpectedly, Eagon 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 Eagon Industrial will offset losses from the drop in Eagon Industrial's long position.The idea behind KG Eco Technology and Eagon Industrial Co 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.| Eagon Industrial vs. Insun Environment New | Eagon Industrial vs. Finebesteel | Eagon Industrial vs. Hyundai BNG Steel | Eagon Industrial vs. DONGKUK STEEL MILL |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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