Correlation Between Kuk Young and Lion Chemtech

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

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

Diversification Opportunities for Kuk Young and Lion Chemtech

0.63

Correlation Coefficient

Kuk Young  Lion Chemtech

Poor diversification

The 3 months correlation between Kuk and Lion is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kuk Young GM and Lion Chemtech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Chemtech and Kuk Young 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 Kuk Young GM 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 Kuk Young i.e., Kuk Young and Lion Chemtech go up and down completely randomly.

Pair Corralation between Kuk Young and Lion Chemtech

Assuming the 90 days trading horizon Kuk Young GM is expected to generate 2.03 times more return on investment than Lion Chemtech. However, Kuk Young is 2.03 times more volatile than Lion Chemtech Co. It trades about 0.07 of its potential returns per unit of risk. Lion Chemtech Co is currently generating about 0.08 per unit of risk. If you would invest  169,100  in Kuk Young GM on August 31, 2024 and sell it today you would earn a total of  24,800  from holding Kuk Young GM or generate 14.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

Kuk Young GM  vs.  Lion Chemtech Co

Kuk Young GM

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kuk Young GM are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kuk Young sustained solid returns over the last few months and may actually be approaching a breakup point.

Lion Chemtech

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lion Chemtech Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lion Chemtech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kuk Young and Lion Chemtech

The main advantage of trading using opposite Kuk Young and Lion Chemtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kuk Young 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.

The idea behind Kuk Young GM 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.