Correlation Between Kyung Chang and KTG Corp

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

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

Diversification Opportunities for Kyung Chang and KTG Corp

-0.57

Correlation Coefficient

Kyung Chang  KTG Corp

Excellent diversification

The 3 months correlation between Kyung and KTG is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Kyung Chang Industrial and KTG Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KTG Corp and Kyung Chang 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 Kyung Chang Industrial are associated (or correlated) with KTG Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KTG Corp has no effect on the direction of Kyung Chang i.e., Kyung Chang and KTG Corp go up and down completely randomly.

Pair Corralation between Kyung Chang and KTG Corp

Assuming the 90 days trading horizon Kyung Chang Industrial is expected to under-perform the KTG Corp. But the stock apears to be less risky and, when comparing its historical volatility, Kyung Chang Industrial is 1.67 times less risky than KTG Corp. The stock trades about -0.11 of its potential returns per unit of risk. The KTG Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  10,740,000  in KTG Corp on September 2, 2024 and sell it today you would earn a total of  1,440,000  from holding KTG Corp or generate 13.41% return on investment over 90 days.

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

Kyung Chang Industrial  vs.  KTG Corp

Kyung Chang Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kyung Chang Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

KTG Corp

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Kyung Chang and KTG Corp

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

The idea behind Kyung Chang Industrial and KTG Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.