Correlation Between KG Eco and Digital Imaging
Can any of the company-specific risk be diversified away by investing in both KG Eco and Digital Imaging 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 Digital Imaging 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 Digital Imaging Technology, you can compare the effects of market volatilities on KG Eco and Digital Imaging 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 Digital Imaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of KG Eco and Digital Imaging.
Diversification Opportunities for KG Eco and Digital Imaging
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 151860 and Digital is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding KG Eco Technology and Digital Imaging Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Imaging Tech 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 Digital Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Imaging Tech has no effect on the direction of KG Eco i.e., KG Eco and Digital Imaging go up and down completely randomly.
Pair Corralation between KG Eco and Digital Imaging
Assuming the 90 days trading horizon KG Eco Technology is expected to under-perform the Digital Imaging. But the stock apears to be less risky and, when comparing its historical volatility, KG Eco Technology is 1.27 times less risky than Digital Imaging. The stock trades about -0.02 of its potential returns per unit of risk. The Digital Imaging Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 516,813 in Digital Imaging Technology on September 14, 2024 and sell it today you would earn a total of 658,187 from holding Digital Imaging Technology or generate 127.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
KG Eco Technology vs. Digital Imaging Technology
Performance |
| Timeline |
| KG Eco Technology |
| Digital Imaging Tech |
KG Eco and Digital Imaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KG Eco and Digital Imaging
The main advantage of trading using opposite KG Eco and Digital Imaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KG Eco position performs unexpectedly, Digital Imaging 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 Digital Imaging will offset losses from the drop in Digital Imaging's long position.| KG Eco vs. Samsung Electronics Co | KG Eco vs. Samsung Electronics Co | KG Eco vs. Naver | KG Eco vs. SK Hynix |
| Digital Imaging vs. SK Hynix | Digital Imaging vs. People Technology | Digital Imaging vs. Hana Materials | Digital Imaging vs. SIMMTECH Co |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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