Correlation Between KG Eco and Korean Drug
Can any of the company-specific risk be diversified away by investing in both KG Eco and Korean Drug 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 Korean Drug 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 Korean Drug Co, you can compare the effects of market volatilities on KG Eco and Korean Drug 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 Korean Drug. Check out your portfolio center. Please also check ongoing floating volatility patterns of KG Eco and Korean Drug.
Diversification Opportunities for KG Eco and Korean Drug
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 151860 and Korean is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding KG Eco Technology and Korean Drug Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Drug 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 Korean Drug. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Drug has no effect on the direction of KG Eco i.e., KG Eco and Korean Drug go up and down completely randomly.
Pair Corralation between KG Eco and Korean Drug
Assuming the 90 days trading horizon KG Eco Technology is expected to generate 2.8 times more return on investment than Korean Drug. However, KG Eco is 2.8 times more volatile than Korean Drug Co. It trades about 0.05 of its potential returns per unit of risk. Korean Drug Co is currently generating about -0.23 per unit of risk. If you would invest 517,000 in KG Eco Technology on August 31, 2024 and sell it today you would earn a total of 15,000 from holding KG Eco Technology or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KG Eco Technology vs. Korean Drug Co
Performance |
| Timeline |
| KG Eco Technology |
| Korean Drug |
KG Eco and Korean Drug Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KG Eco and Korean Drug
The main advantage of trading using opposite KG Eco and Korean Drug positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KG Eco position performs unexpectedly, Korean Drug 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 Korean Drug will offset losses from the drop in Korean Drug's long position.| KG Eco vs. Busan Industrial Co | KG Eco vs. Busan Ind | KG Eco vs. Mirae Asset Daewoo | KG Eco vs. Finebesteel |
| Korean Drug vs. SM Entertainment Co | Korean Drug vs. Korea Computer | Korean Drug vs. T3 Entertainment Co | Korean Drug vs. Alton Sports CoLtd |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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