Correlation Between KG Eco and KCI
Can any of the company-specific risk be diversified away by investing in both KG Eco and KCI 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 KCI 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 KCI Limited, you can compare the effects of market volatilities on KG Eco and KCI 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 KCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of KG Eco and KCI.
Diversification Opportunities for KG Eco and KCI
Poor diversification
The 3 months correlation between 151860 and KCI is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding KG Eco Technology and KCI Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCI Limited 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 KCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KCI Limited has no effect on the direction of KG Eco i.e., KG Eco and KCI go up and down completely randomly.
Pair Corralation between KG Eco and KCI
Assuming the 90 days trading horizon KG Eco Technology is expected to generate 1.71 times more return on investment than KCI. However, KG Eco is 1.71 times more volatile than KCI Limited. It trades about -0.06 of its potential returns per unit of risk. KCI Limited is currently generating about -0.17 per unit of risk. If you would invest 502,000 in KG Eco Technology on September 12, 2024 and sell it today you would lose (37,500) from holding KG Eco Technology or give up 7.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KG Eco Technology vs. KCI Limited
Performance |
| Timeline |
| KG Eco Technology |
| KCI Limited |
KG Eco and KCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KG Eco and KCI
The main advantage of trading using opposite KG Eco and KCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KG Eco position performs unexpectedly, KCI 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 KCI will offset losses from the drop in KCI's long position.| KG Eco vs. Samsung Electronics Co | KG Eco vs. Samsung Electronics Co | KG Eco vs. Naver | KG Eco vs. SK Hynix |
| KCI vs. TOPMATERIAL LTD | KCI vs. Hyosung Advanced Materials | KCI vs. Chin Yang Chemical | KCI vs. EV Advanced Material |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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