Correlation Between TISCO Financial and KGI Securities

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Can any of the company-specific risk be diversified away by investing in both TISCO Financial and KGI Securities 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 TISCO Financial and KGI Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TISCO Financial Group and KGI Securities Public, you can compare the effects of market volatilities on TISCO Financial and KGI Securities 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 TISCO Financial with a short position of KGI Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of TISCO Financial and KGI Securities.

Diversification Opportunities for TISCO Financial and KGI Securities

-0.44
  Correlation Coefficient

Very good diversification

The 3 months correlation between TISCO and KGI is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding TISCO Financial Group and KGI Securities Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KGI Securities Public and TISCO Financial 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 TISCO Financial Group are associated (or correlated) with KGI Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KGI Securities Public has no effect on the direction of TISCO Financial i.e., TISCO Financial and KGI Securities go up and down completely randomly.

Pair Corralation between TISCO Financial and KGI Securities

Assuming the 90 days trading horizon TISCO Financial is expected to generate 5.57 times less return on investment than KGI Securities. But when comparing it to its historical volatility, TISCO Financial Group is 1.6 times less risky than KGI Securities. It trades about 0.04 of its potential returns per unit of risk. KGI Securities Public is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  414.00  in KGI Securities Public on October 24, 2024 and sell it today you would earn a total of  6.00  from holding KGI Securities Public or generate 1.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

TISCO Financial Group  vs.  KGI Securities Public

 Performance 
       Timeline  
TISCO Financial Group 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in TISCO Financial Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, TISCO Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
KGI Securities Public 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days KGI Securities Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, KGI Securities is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

TISCO Financial and KGI Securities Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with TISCO Financial and KGI Securities

The main advantage of trading using opposite TISCO Financial and KGI Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TISCO Financial position performs unexpectedly, KGI Securities 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 KGI Securities will offset losses from the drop in KGI Securities' long position.
The idea behind TISCO Financial Group and KGI Securities Public 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.
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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