Correlation Between SIMMTECH and KCC
Can any of the company-specific risk be diversified away by investing in both SIMMTECH 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 SIMMTECH and KCC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIMMTECH Co and KCC Corporation, you can compare the effects of market volatilities on SIMMTECH 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 SIMMTECH with a short position of KCC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMMTECH and KCC.
Diversification Opportunities for SIMMTECH and KCC
Very poor diversification
The 3 months correlation between SIMMTECH and KCC is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SIMMTECH Co and KCC Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCC Corporation and SIMMTECH 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 SIMMTECH Co 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 SIMMTECH i.e., SIMMTECH and KCC go up and down completely randomly.
Pair Corralation between SIMMTECH and KCC
Assuming the 90 days trading horizon SIMMTECH Co is expected to under-perform the KCC. In addition to that, SIMMTECH is 1.39 times more volatile than KCC Corporation. It trades about -0.47 of its total potential returns per unit of risk. KCC Corporation is currently generating about -0.16 per unit of volatility. If you would invest 25,550,000 in KCC Corporation on August 24, 2024 and sell it today you would lose (2,150,000) from holding KCC Corporation or give up 8.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIMMTECH Co vs. KCC Corp.
Performance |
| Timeline |
| SIMMTECH |
| KCC Corporation |
SIMMTECH and KCC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMMTECH and KCC
The main advantage of trading using opposite SIMMTECH and KCC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMMTECH 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.| SIMMTECH vs. Dongnam Chemical Co | SIMMTECH vs. Cube Entertainment | SIMMTECH vs. LG Chemicals | SIMMTECH vs. Kaonmedia Co |
| KCC vs. Lotte Non Life Insurance | KCC vs. Sangsangin Investment Securities | KCC vs. DSC Investment | KCC vs. Lindeman Asia Investment |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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