Correlation Between Derkwoo Electronics and KPX Chemical
Can any of the company-specific risk be diversified away by investing in both Derkwoo Electronics and KPX Chemical 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 Derkwoo Electronics and KPX Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Derkwoo Electronics Co and KPX Chemical, you can compare the effects of market volatilities on Derkwoo Electronics and KPX Chemical 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 Derkwoo Electronics with a short position of KPX Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Derkwoo Electronics and KPX Chemical.
Diversification Opportunities for Derkwoo Electronics and KPX Chemical
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Derkwoo and KPX is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Derkwoo Electronics Co and KPX Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPX Chemical and Derkwoo Electronics 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 Derkwoo Electronics Co are associated (or correlated) with KPX Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPX Chemical has no effect on the direction of Derkwoo Electronics i.e., Derkwoo Electronics and KPX Chemical go up and down completely randomly.
Pair Corralation between Derkwoo Electronics and KPX Chemical
Assuming the 90 days trading horizon Derkwoo Electronics Co is expected to under-perform the KPX Chemical. In addition to that, Derkwoo Electronics is 3.16 times more volatile than KPX Chemical. It trades about -0.13 of its total potential returns per unit of risk. KPX Chemical is currently generating about -0.13 per unit of volatility. If you would invest 4,550,000 in KPX Chemical on September 13, 2024 and sell it today you would lose (165,000) from holding KPX Chemical or give up 3.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Derkwoo Electronics Co vs. KPX Chemical
Performance |
| Timeline |
| Derkwoo Electronics |
| KPX Chemical |
Derkwoo Electronics and KPX Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Derkwoo Electronics and KPX Chemical
The main advantage of trading using opposite Derkwoo Electronics and KPX Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Derkwoo Electronics position performs unexpectedly, KPX Chemical 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 KPX Chemical will offset losses from the drop in KPX Chemical's long position.| Derkwoo Electronics vs. Samsung Electronics Co | Derkwoo Electronics vs. Samsung Electronics Co | Derkwoo Electronics vs. LG Energy Solution | Derkwoo Electronics vs. SK Hynix |
| KPX Chemical vs. ITM Semiconductor Co | KPX Chemical vs. Dgb Financial | KPX Chemical vs. CJ Seafood Corp | KPX Chemical vs. Sewoon Medical 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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