Correlation Between Nable Communications and Kyung Chang
Can any of the company-specific risk be diversified away by investing in both Nable Communications and Kyung Chang 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 Nable Communications and Kyung Chang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nable Communications and Kyung Chang Industrial, you can compare the effects of market volatilities on Nable Communications and Kyung Chang 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 Nable Communications with a short position of Kyung Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nable Communications and Kyung Chang.
Diversification Opportunities for Nable Communications and Kyung Chang
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nable and Kyung is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Nable Communications and Kyung Chang Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyung Chang Industrial and Nable Communications 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 Nable Communications are associated (or correlated) with Kyung Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyung Chang Industrial has no effect on the direction of Nable Communications i.e., Nable Communications and Kyung Chang go up and down completely randomly.
Pair Corralation between Nable Communications and Kyung Chang
Assuming the 90 days trading horizon Nable Communications is expected to under-perform the Kyung Chang. But the stock apears to be less risky and, when comparing its historical volatility, Nable Communications is 2.09 times less risky than Kyung Chang. The stock trades about -0.02 of its potential returns per unit of risk. The Kyung Chang Industrial is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 219,000 in Kyung Chang Industrial on September 1, 2024 and sell it today you would lose (19,000) from holding Kyung Chang Industrial or give up 8.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nable Communications vs. Kyung Chang Industrial
Performance |
| Timeline |
| Nable Communications |
| Kyung Chang Industrial |
Nable Communications and Kyung Chang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nable Communications and Kyung Chang
The main advantage of trading using opposite Nable Communications and Kyung Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nable Communications position performs unexpectedly, Kyung Chang 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 Kyung Chang will offset losses from the drop in Kyung Chang's long position.| Nable Communications vs. Lotte Non Life Insurance | Nable Communications vs. Korean Reinsurance Co | Nable Communications vs. Korea Information Communications | Nable Communications vs. DB Insurance Co |
| Kyung Chang vs. FNC Entertainment Co | Kyung Chang vs. Samick Musical Instruments | Kyung Chang vs. Tamul Multimedia Co | Kyung Chang vs. Daedong Metals 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |