Correlation Between KSD and Transport
Can any of the company-specific risk be diversified away by investing in both KSD and Transport 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 KSD and Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KSD and Transport and Industry, you can compare the effects of market volatilities on KSD and Transport 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 KSD with a short position of Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of KSD and Transport.
Diversification Opportunities for KSD and Transport
Good diversification
The 3 months correlation between KSD and Transport is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding KSD and Transport and Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport and Industry and KSD 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 KSD are associated (or correlated) with Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport and Industry has no effect on the direction of KSD i.e., KSD and Transport go up and down completely randomly.
Pair Corralation between KSD and Transport
Assuming the 90 days trading horizon KSD is expected to generate 0.55 times more return on investment than Transport. However, KSD is 1.8 times less risky than Transport. It trades about 0.06 of its potential returns per unit of risk. Transport and Industry is currently generating about -0.14 per unit of risk. If you would invest 350,000 in KSD on September 14, 2024 and sell it today you would earn a total of 140,000 from holding KSD or generate 40.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.08% |
| Values | Daily Returns |
KSD vs. Transport and Industry
Performance |
| Timeline |
| KSD |
| Transport and Industry |
KSD and Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KSD and Transport
The main advantage of trading using opposite KSD and Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KSD position performs unexpectedly, Transport 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 Transport will offset losses from the drop in Transport's long position.| KSD vs. Transport and Industry | KSD vs. Vietnam Petroleum Transport | KSD vs. Vinhomes JSC | KSD vs. Hai An Transport |
| Transport vs. FIT INVEST JSC | Transport vs. Damsan JSC | Transport vs. An Phat Plastic | Transport vs. Alphanam ME |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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