Correlation Between Koryo Credit and Ssangyong Materials

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

By analyzing existing cross correlation between Koryo Credit Information and Ssangyong Materials Corp, you can compare the effects of market volatilities on Koryo Credit and Ssangyong Materials 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 Koryo Credit with a short position of Ssangyong Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koryo Credit and Ssangyong Materials.

Diversification Opportunities for Koryo Credit and Ssangyong Materials

-0.18

Correlation Coefficient

Koryo Credit  Ssangyong Materials

Good diversification

The 3 months correlation between Koryo and Ssangyong is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Koryo Credit Information and Ssangyong Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssangyong Materials Corp and Koryo Credit 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 Koryo Credit Information are associated (or correlated) with Ssangyong Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssangyong Materials Corp has no effect on the direction of Koryo Credit i.e., Koryo Credit and Ssangyong Materials go up and down completely randomly.

Pair Corralation between Koryo Credit and Ssangyong Materials

Assuming the 90 days trading horizon Koryo Credit is expected to generate 1.65 times less return on investment than Ssangyong Materials. But when comparing it to its historical volatility, Koryo Credit Information is 3.44 times less risky than Ssangyong Materials. It trades about 0.04 of its potential returns per unit of risk. Ssangyong Materials Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  219,500  in Ssangyong Materials Corp on September 26, 2024 and sell it today you would earn a total of  1,500  from holding Ssangyong Materials Corp or generate 0.68% return on investment over 90 days.

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

Koryo Credit Information  vs.  Ssangyong Materials Corp

Koryo Credit Information

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Koryo Credit Information are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Koryo Credit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ssangyong Materials Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ssangyong Materials Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ssangyong Materials is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Koryo Credit and Ssangyong Materials

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

The idea behind Koryo Credit Information and Ssangyong Materials 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.