Correlation Between KG Eco and Lindeman Asia
Can any of the company-specific risk be diversified away by investing in both KG Eco and Lindeman Asia 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 Lindeman Asia 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 Lindeman Asia Investment, you can compare the effects of market volatilities on KG Eco and Lindeman Asia 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 Lindeman Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of KG Eco and Lindeman Asia.
Diversification Opportunities for KG Eco and Lindeman Asia
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 151860 and Lindeman is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding KG Eco Technology and Lindeman Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindeman Asia Investment 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 Lindeman Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindeman Asia Investment has no effect on the direction of KG Eco i.e., KG Eco and Lindeman Asia go up and down completely randomly.
Pair Corralation between KG Eco and Lindeman Asia
Assuming the 90 days trading horizon KG Eco Technology is expected to generate 1.04 times more return on investment than Lindeman Asia. However, KG Eco is 1.04 times more volatile than Lindeman Asia Investment. It trades about 0.05 of its potential returns per unit of risk. Lindeman Asia Investment is currently generating about -0.11 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. Lindeman Asia Investment
Performance |
| Timeline |
| KG Eco Technology |
| Lindeman Asia Investment |
KG Eco and Lindeman Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KG Eco and Lindeman Asia
The main advantage of trading using opposite KG Eco and Lindeman Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KG Eco position performs unexpectedly, Lindeman Asia 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 Lindeman Asia will offset losses from the drop in Lindeman Asia's long position.| KG Eco vs. Busan Industrial Co | KG Eco vs. Busan Ind | KG Eco vs. Mirae Asset Daewoo | KG Eco vs. Finebesteel |
| Lindeman Asia vs. Hanwha InvestmentSecurities Co | Lindeman Asia vs. DSC Investment | Lindeman Asia vs. Solution Advanced Technology | Lindeman Asia vs. Busan Industrial 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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