Correlation Between KCE Electronics and Hana Microelectronics
Can any of the company-specific risk be diversified away by investing in both KCE Electronics and Hana Microelectronics 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 KCE Electronics and Hana Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KCE Electronics Public and Hana Microelectronics Public, you can compare the effects of market volatilities on KCE Electronics and Hana Microelectronics 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 KCE Electronics with a short position of Hana Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of KCE Electronics and Hana Microelectronics.
Diversification Opportunities for KCE Electronics and Hana Microelectronics
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KCE and Hana is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding KCE Electronics Public and Hana Microelectronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Microelectronics and KCE 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 KCE Electronics Public are associated (or correlated) with Hana Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Microelectronics has no effect on the direction of KCE Electronics i.e., KCE Electronics and Hana Microelectronics go up and down completely randomly.
Pair Corralation between KCE Electronics and Hana Microelectronics
Assuming the 90 days trading horizon KCE Electronics Public is expected to under-perform the Hana Microelectronics. But the stock apears to be less risky and, when comparing its historical volatility, KCE Electronics Public is 1.22 times less risky than Hana Microelectronics. The stock trades about -0.15 of its potential returns per unit of risk. The Hana Microelectronics Public is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 4,100 in Hana Microelectronics Public on August 25, 2024 and sell it today you would lose (1,325) from holding Hana Microelectronics Public or give up 32.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KCE Electronics Public vs. Hana Microelectronics Public
Performance |
| Timeline |
| KCE Electronics Public |
| Hana Microelectronics |
KCE Electronics and Hana Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KCE Electronics and Hana Microelectronics
The main advantage of trading using opposite KCE Electronics and Hana Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KCE Electronics position performs unexpectedly, Hana Microelectronics 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 Hana Microelectronics will offset losses from the drop in Hana Microelectronics' long position.| KCE Electronics vs. AP Public | KCE Electronics vs. Jasmine International Public | KCE Electronics vs. Asia Plus Group | KCE Electronics vs. Bangkok Aviation Fuel |
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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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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