Correlation Between KG Eco and DataSolution
Can any of the company-specific risk be diversified away by investing in both KG Eco and DataSolution 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 DataSolution 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 DataSolution, you can compare the effects of market volatilities on KG Eco and DataSolution 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 DataSolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of KG Eco and DataSolution.
Diversification Opportunities for KG Eco and DataSolution
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 151860 and DataSolution is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding KG Eco Technology and DataSolution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DataSolution 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 DataSolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DataSolution has no effect on the direction of KG Eco i.e., KG Eco and DataSolution go up and down completely randomly.
Pair Corralation between KG Eco and DataSolution
Assuming the 90 days trading horizon KG Eco is expected to generate 1.36 times less return on investment than DataSolution. But when comparing it to its historical volatility, KG Eco Technology is 1.75 times less risky than DataSolution. It trades about 0.16 of its potential returns per unit of risk. DataSolution is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 461,000 in DataSolution on October 20, 2024 and sell it today you would earn a total of 35,500 from holding DataSolution or generate 7.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KG Eco Technology vs. DataSolution
Performance |
| Timeline |
| KG Eco Technology |
| DataSolution |
KG Eco and DataSolution Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KG Eco and DataSolution
The main advantage of trading using opposite KG Eco and DataSolution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KG Eco position performs unexpectedly, DataSolution 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 DataSolution will offset losses from the drop in DataSolution's long position.| KG Eco vs. Nature and Environment | KG Eco vs. Daishin Information Communications | KG Eco vs. Sejong Telecom | KG Eco vs. Hyundai BNG Steel |
| DataSolution vs. Korea Information Communications | DataSolution vs. Shinhan Inverse Copper | DataSolution vs. KT Submarine Telecom | DataSolution vs. Daiyang Metal 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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