Correlation Between Kosdaq Composite and Lion Chemtech

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Can any of the company-specific risk be diversified away by investing in both Kosdaq Composite and Lion Chemtech 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 Kosdaq Composite and Lion Chemtech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kosdaq Composite Index and Lion Chemtech Co, you can compare the effects of market volatilities on Kosdaq Composite and Lion Chemtech 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 Kosdaq Composite with a short position of Lion Chemtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kosdaq Composite and Lion Chemtech.

Diversification Opportunities for Kosdaq Composite and Lion Chemtech

-0.56

Correlation Coefficient

Kosdaq Composite

Lion Chemtech

Excellent diversification

The 3 months correlation between Kosdaq and Lion is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Kosdaq Composite Index and Lion Chemtech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Chemtech and Kosdaq Composite 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 Kosdaq Composite Index are associated (or correlated) with Lion Chemtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Chemtech has no effect on the direction of Kosdaq Composite i.e., Kosdaq Composite and Lion Chemtech go up and down completely randomly.

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Pair Corralation between Kosdaq Composite and Lion Chemtech

Assuming the 90 days trading horizon Kosdaq Composite Index is expected to generate 0.67 times more return on investment than Lion Chemtech. However, Kosdaq Composite Index is 1.49 times less risky than Lion Chemtech. It trades about -0.05 of its potential returns per unit of risk. Lion Chemtech Co is currently generating about -0.04 per unit of risk. If you would invest 82,244 in Kosdaq Composite Index on August 25, 2024 and sell it today you would lose (14,489) from holding Kosdaq Composite Index or give up 17.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kosdaq Composite Index vs. Lion Chemtech Co

Performance

Timeline

Kosdaq Composite and Lion Chemtech Volatility Contrast

Predicted Return Density

Returns

Kosdaq Composite Index

Pair trading matchups for Kosdaq Composite

	Kosdaq Composite vs. Kbi Metal Co
	Kosdaq Composite vs. Shinsung Delta Tech
	Kosdaq Composite vs. Woori Technology
	Kosdaq Composite vs. Dongil Metal Co

Lion Chemtech Co

Pair trading matchups for Lion Chemtech

	Lion Chemtech vs. Nature and Environment
	Lion Chemtech vs. IL Science Co

Pair Trading with Kosdaq Composite and Lion Chemtech

The main advantage of trading using opposite Kosdaq Composite and Lion Chemtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kosdaq Composite position performs unexpectedly, Lion Chemtech 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 Lion Chemtech will offset losses from the drop in Lion Chemtech's long position.

	Kosdaq Composite vs. Kbi Metal Co
	Kosdaq Composite vs. Shinsung Delta Tech
	Kosdaq Composite vs. Woori Technology
	Kosdaq Composite vs. Dongil Metal Co

The idea behind Kosdaq Composite Index and Lion Chemtech Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

	Lion Chemtech vs. Nature and Environment
	Lion Chemtech vs. IL Science Co

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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