Correlation Between DSC Investment and KCC
Can any of the company-specific risk be diversified away by investing in both DSC Investment 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 DSC Investment and KCC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DSC Investment and KCC Corporation, you can compare the effects of market volatilities on DSC Investment 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 DSC Investment with a short position of KCC. Check out your portfolio center. Please also check ongoing floating volatility patterns of DSC Investment and KCC.
Diversification Opportunities for DSC Investment and KCC
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DSC and KCC is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding DSC Investment and KCC Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCC Corporation and DSC Investment 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 DSC Investment 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 DSC Investment i.e., DSC Investment and KCC go up and down completely randomly.
Pair Corralation between DSC Investment and KCC
Assuming the 90 days trading horizon DSC Investment is expected to generate 0.74 times more return on investment than KCC. However, DSC Investment is 1.35 times less risky than KCC. It trades about -0.03 of its potential returns per unit of risk. KCC Corporation is currently generating about -0.22 per unit of risk. If you would invest 286,500 in DSC Investment on August 28, 2024 and sell it today you would lose (4,000) from holding DSC Investment or give up 1.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DSC Investment vs. KCC Corp.
Performance |
| Timeline |
| DSC Investment |
| KCC Corporation |
DSC Investment and KCC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DSC Investment and KCC
The main advantage of trading using opposite DSC Investment and KCC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DSC Investment 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.The idea behind DSC Investment and KCC Corporation pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| KCC vs. Hansol Homedeco Co | KCC vs. LG Electronics Pfd | KCC vs. Hyunwoo Industrial Co | KCC vs. Sangshin Electronics 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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