Correlation Between Myoung Shin and KCI

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

By analyzing existing cross correlation between Myoung Shin Industrial and KCI Limited, you can compare the effects of market volatilities on Myoung Shin and KCI 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 Myoung Shin with a short position of KCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Myoung Shin and KCI.

Diversification Opportunities for Myoung Shin and KCI

0.35

Correlation Coefficient

Myoung Shin  KCI

Weak diversification

The 3 months correlation between Myoung and KCI is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Myoung Shin Industrial and KCI Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCI Limited and Myoung Shin 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 Myoung Shin Industrial are associated (or correlated) with KCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KCI Limited has no effect on the direction of Myoung Shin i.e., Myoung Shin and KCI go up and down completely randomly.

Pair Corralation between Myoung Shin and KCI

Assuming the 90 days trading horizon Myoung Shin Industrial is expected to generate 2.45 times more return on investment than KCI. However, Myoung Shin is 2.45 times more volatile than KCI Limited. It trades about 0.05 of its potential returns per unit of risk. KCI Limited is currently generating about -0.12 per unit of risk. If you would invest  1,073,000  in Myoung Shin Industrial on September 4, 2024 and sell it today you would earn a total of  82,000  from holding Myoung Shin Industrial or generate 7.64% return on investment over 90 days.

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

Myoung Shin Industrial  vs.  KCI Limited

Myoung Shin Industrial

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Myoung Shin Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Myoung Shin may actually be approaching a critical reversion point that can send shares even higher in January 2025.

KCI Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KCI Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Myoung Shin and KCI

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

The idea behind Myoung Shin Industrial and KCI Limited 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..