Correlation Between Keyang Electric and FLITTO
Can any of the company-specific risk be diversified away by investing in both Keyang Electric and FLITTO 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 Keyang Electric and FLITTO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keyang Electric Machinery and FLITTO Inc, you can compare the effects of market volatilities on Keyang Electric and FLITTO 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 Keyang Electric with a short position of FLITTO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keyang Electric and FLITTO.
Diversification Opportunities for Keyang Electric and FLITTO
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Keyang and FLITTO is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Keyang Electric Machinery and FLITTO Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLITTO Inc and Keyang Electric 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 Keyang Electric Machinery are associated (or correlated) with FLITTO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLITTO Inc has no effect on the direction of Keyang Electric i.e., Keyang Electric and FLITTO go up and down completely randomly.
Pair Corralation between Keyang Electric and FLITTO
Assuming the 90 days trading horizon Keyang Electric Machinery is expected to under-perform the FLITTO. But the stock apears to be less risky and, when comparing its historical volatility, Keyang Electric Machinery is 3.24 times less risky than FLITTO. The stock trades about -0.07 of its potential returns per unit of risk. The FLITTO Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,634,000 in FLITTO Inc on September 7, 2024 and sell it today you would earn a total of 253,000 from holding FLITTO Inc or generate 15.48% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Keyang Electric Machinery vs. FLITTO Inc
Performance |
Timeline |
Keyang Electric Machinery |
FLITTO Inc |
Keyang Electric and FLITTO Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Keyang Electric and FLITTO
The main advantage of trading using opposite Keyang Electric and FLITTO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keyang Electric position performs unexpectedly, FLITTO 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 FLITTO will offset losses from the drop in FLITTO's long position.Keyang Electric vs. Korean Air Lines | Keyang Electric vs. Sempio Foods Co | Keyang Electric vs. DONGKUK TED METAL | Keyang Electric vs. Dongbang Transport Logistics |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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