Correlation Between KCI and Insung Information

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

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

Diversification Opportunities for KCI and Insung Information

0.68

Correlation Coefficient

KCI  Insung Information

Poor diversification

The 3 months correlation between KCI and Insung is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding KCI Limited and Insung Information Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insung Information and KCI 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 KCI Limited are associated (or correlated) with Insung Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insung Information has no effect on the direction of KCI i.e., KCI and Insung Information go up and down completely randomly.

Pair Corralation between KCI and Insung Information

Assuming the 90 days trading horizon KCI Limited is expected to under-perform the Insung Information. But the stock apears to be less risky and, when comparing its historical volatility, KCI Limited is 1.37 times less risky than Insung Information. The stock trades about -0.1 of its potential returns per unit of risk. The Insung Information Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  185,500  in Insung Information Co on September 13, 2024 and sell it today you would earn a total of  1,400  from holding Insung Information Co or generate 0.75% return on investment over 90 days.

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

KCI Limited  vs.  Insung Information Co

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.

Insung Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insung Information Co 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.

Pair Trading with KCI and Insung Information

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

The idea behind KCI Limited and Insung Information 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.