Correlation Between KIM KINDEX and ACE 10Y
Can any of the company-specific risk be diversified away by investing in both KIM KINDEX and ACE 10Y 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 KIM KINDEX and ACE 10Y into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KIM KINDEX SP500 and ACE 10Y KTB, you can compare the effects of market volatilities on KIM KINDEX and ACE 10Y 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 KIM KINDEX with a short position of ACE 10Y. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIM KINDEX and ACE 10Y.
Diversification Opportunities for KIM KINDEX and ACE 10Y
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KIM and ACE is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding KIM KINDEX SP500 and ACE 10Y KTB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACE 10Y KTB and KIM KINDEX 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 KIM KINDEX SP500 are associated (or correlated) with ACE 10Y. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACE 10Y KTB has no effect on the direction of KIM KINDEX i.e., KIM KINDEX and ACE 10Y go up and down completely randomly.
Pair Corralation between KIM KINDEX and ACE 10Y
Assuming the 90 days trading horizon KIM KINDEX SP500 is expected to generate 2.85 times more return on investment than ACE 10Y. However, KIM KINDEX is 2.85 times more volatile than ACE 10Y KTB. It trades about 0.13 of its potential returns per unit of risk. ACE 10Y KTB is currently generating about 0.14 per unit of risk. If you would invest 2,138,500 in KIM KINDEX SP500 on October 21, 2024 and sell it today you would earn a total of 46,500 from holding KIM KINDEX SP500 or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KIM KINDEX SP500 vs. ACE 10Y KTB
Performance |
| Timeline |
| KIM KINDEX SP500 |
| ACE 10Y KTB |
KIM KINDEX and ACE 10Y Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KIM KINDEX and ACE 10Y
The main advantage of trading using opposite KIM KINDEX and ACE 10Y positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KIM KINDEX position performs unexpectedly, ACE 10Y 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 ACE 10Y will offset losses from the drop in ACE 10Y's long position.| KIM KINDEX vs. Samsung Asset Management | KIM KINDEX vs. Samsung Kodex Korea | KIM KINDEX vs. Shinhan Dollar Index | KIM KINDEX vs. KODEX NASDAQ100TR |
| ACE 10Y vs. Samsung Asset Management | ACE 10Y vs. Samsung Kodex Korea | ACE 10Y vs. Shinhan Dollar Index | ACE 10Y vs. KIM KINDEX SP500 |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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