Correlation Between Design and KyungIn Electronics
Can any of the company-specific risk be diversified away by investing in both Design and KyungIn Electronics 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 Design and KyungIn Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Design Co and KyungIn Electronics Co, you can compare the effects of market volatilities on Design and KyungIn Electronics 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 Design with a short position of KyungIn Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Design and KyungIn Electronics.
Diversification Opportunities for Design and KyungIn Electronics
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Design and KyungIn is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Design Co and KyungIn Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KyungIn Electronics and Design 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 Design Co are associated (or correlated) with KyungIn Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KyungIn Electronics has no effect on the direction of Design i.e., Design and KyungIn Electronics go up and down completely randomly.
Pair Corralation between Design and KyungIn Electronics
Assuming the 90 days trading horizon Design Co is expected to generate 7.31 times more return on investment than KyungIn Electronics. However, Design is 7.31 times more volatile than KyungIn Electronics Co. It trades about 0.03 of its potential returns per unit of risk. KyungIn Electronics Co is currently generating about -0.07 per unit of risk. If you would invest 123,000 in Design Co on September 3, 2024 and sell it today you would lose (24,100) from holding Design Co or give up 19.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Design Co vs. KyungIn Electronics Co
Performance |
| Timeline |
| Design |
| KyungIn Electronics |
Design and KyungIn Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Design and KyungIn Electronics
The main advantage of trading using opposite Design and KyungIn Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Design position performs unexpectedly, KyungIn Electronics 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 KyungIn Electronics will offset losses from the drop in KyungIn Electronics' long position.| Design vs. Wave Electronics Co | Design vs. Anam Electronics Co | Design vs. Sangshin Electronics Co | Design vs. Samji Electronics Co |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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