Correlation Between Daewoo SBI and KCC
Can any of the company-specific risk be diversified away by investing in both Daewoo SBI and KCC 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 Daewoo SBI and KCC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo SBI SPAC and KCC Corporation, you can compare the effects of market volatilities on Daewoo SBI and KCC 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 Daewoo SBI with a short position of KCC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo SBI and KCC.
Diversification Opportunities for Daewoo SBI and KCC
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Daewoo and KCC is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo SBI SPAC and KCC Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCC Corporation and Daewoo SBI 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 Daewoo SBI SPAC are associated (or correlated) with KCC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KCC Corporation has no effect on the direction of Daewoo SBI i.e., Daewoo SBI and KCC go up and down completely randomly.
Pair Corralation between Daewoo SBI and KCC
Assuming the 90 days trading horizon Daewoo SBI SPAC is expected to under-perform the KCC. But the stock apears to be less risky and, when comparing its historical volatility, Daewoo SBI SPAC is 1.24 times less risky than KCC. The stock trades about -0.28 of its potential returns per unit of risk. The KCC Corporation is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 25,650,000 in KCC Corporation on September 3, 2024 and sell it today you would lose (1,500,000) from holding KCC Corporation or give up 5.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo SBI SPAC vs. KCC Corp.
Performance |
| Timeline |
| Daewoo SBI SPAC |
| KCC Corporation |
Daewoo SBI and KCC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo SBI and KCC
The main advantage of trading using opposite Daewoo SBI and KCC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo SBI position performs unexpectedly, KCC 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 KCC will offset losses from the drop in KCC's long position.| Daewoo SBI vs. Daejoo Electronic Materials | Daewoo SBI vs. Mgame Corp | Daewoo SBI vs. Kakao Games Corp | Daewoo SBI vs. Iljin Materials Co |
| KCC vs. Daejung Chemicals Metals | KCC vs. Heungkuk Metaltech CoLtd | KCC vs. Kbi Metal Co | KCC vs. Hanjoo Light Metal |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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