Correlation Between Hyosung Advanced and KPX Chemical
Can any of the company-specific risk be diversified away by investing in both Hyosung Advanced 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 Hyosung Advanced and KPX Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyosung Advanced Materials and KPX Chemical, you can compare the effects of market volatilities on Hyosung Advanced 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 Hyosung Advanced with a short position of KPX Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyosung Advanced and KPX Chemical.
Diversification Opportunities for Hyosung Advanced and KPX Chemical
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hyosung and KPX is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Hyosung Advanced Materials and KPX Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPX Chemical and Hyosung Advanced 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 Hyosung Advanced Materials 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 Hyosung Advanced i.e., Hyosung Advanced and KPX Chemical go up and down completely randomly.
Pair Corralation between Hyosung Advanced and KPX Chemical
Assuming the 90 days trading horizon Hyosung Advanced Materials is expected to under-perform the KPX Chemical. In addition to that, Hyosung Advanced is 3.1 times more volatile than KPX Chemical. It trades about -0.05 of its total potential returns per unit of risk. KPX Chemical is currently generating about 0.02 per unit of volatility. If you would invest 4,139,175 in KPX Chemical on December 27, 2024 and sell it today you would earn a total of 220,825 from holding KPX Chemical or generate 5.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyosung Advanced Materials vs. KPX Chemical
Performance |
| Timeline |
| Hyosung Advanced Mat |
| KPX Chemical |
Hyosung Advanced and KPX Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyosung Advanced and KPX Chemical
The main advantage of trading using opposite Hyosung Advanced and KPX Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyosung Advanced 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.| Hyosung Advanced vs. Hyunwoo Industrial Co | Hyosung Advanced vs. Sangsin Energy Display | Hyosung Advanced vs. GS Retail Co | Hyosung Advanced vs. Lotte Rental Co |
| KPX Chemical vs. Alton Sports CoLtd | KPX Chemical vs. Display Tech Co | KPX Chemical vs. Ajusteel Co | KPX Chemical vs. Husteel |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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