Correlation Between Raontech and Kolon Life
Can any of the company-specific risk be diversified away by investing in both Raontech and Kolon Life 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 Raontech and Kolon Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raontech and Kolon Life Science, you can compare the effects of market volatilities on Raontech and Kolon Life 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 Raontech with a short position of Kolon Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raontech and Kolon Life.
Diversification Opportunities for Raontech and Kolon Life
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Raontech and Kolon is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Raontech and Kolon Life Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kolon Life Science and Raontech 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 Raontech are associated (or correlated) with Kolon Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kolon Life Science has no effect on the direction of Raontech i.e., Raontech and Kolon Life go up and down completely randomly.
Pair Corralation between Raontech and Kolon Life
Assuming the 90 days trading horizon Raontech is expected to generate 1.76 times more return on investment than Kolon Life. However, Raontech is 1.76 times more volatile than Kolon Life Science. It trades about -0.01 of its potential returns per unit of risk. Kolon Life Science is currently generating about -0.03 per unit of risk. If you would invest 542,000 in Raontech on September 5, 2024 and sell it today you would lose (249,000) from holding Raontech or give up 45.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 88.41% |
| Values | Daily Returns |
Raontech vs. Kolon Life Science
Performance |
| Timeline |
| Raontech |
| Kolon Life Science |
Raontech and Kolon Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raontech and Kolon Life
The main advantage of trading using opposite Raontech and Kolon Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raontech position performs unexpectedly, Kolon Life 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 Kolon Life will offset losses from the drop in Kolon Life's long position.| Raontech vs. Samsung Electronics Co | Raontech vs. Samsung Electronics Co | Raontech vs. LG Energy Solution | Raontech vs. SK Hynix |
| Kolon Life vs. Chin Yang Chemical | Kolon Life vs. Raontech | Kolon Life vs. Orbitech Co | Kolon Life vs. Tae Kyung Chemical |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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