Correlation Between Kia Corp and Kumho Petro
Can any of the company-specific risk be diversified away by investing in both Kia Corp and Kumho Petro 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 Kia Corp and Kumho Petro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kia Corp and Kumho Petro Chemical, you can compare the effects of market volatilities on Kia Corp and Kumho Petro 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 Kia Corp with a short position of Kumho Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kia Corp and Kumho Petro.
Diversification Opportunities for Kia Corp and Kumho Petro
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kia and Kumho is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Kia Corp and Kumho Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho Petro Chemical and Kia Corp 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 Kia Corp are associated (or correlated) with Kumho Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Petro Chemical has no effect on the direction of Kia Corp i.e., Kia Corp and Kumho Petro go up and down completely randomly.
Pair Corralation between Kia Corp and Kumho Petro
Assuming the 90 days trading horizon Kia Corp is expected to generate 0.59 times more return on investment than Kumho Petro. However, Kia Corp is 1.68 times less risky than Kumho Petro. It trades about 0.08 of its potential returns per unit of risk. Kumho Petro Chemical is currently generating about 0.02 per unit of risk. If you would invest 9,720,000 in Kia Corp on October 25, 2024 and sell it today you would earn a total of 580,000 from holding Kia Corp or generate 5.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kia Corp vs. Kumho Petro Chemical
Performance |
| Timeline |
| Kia Corp |
| Kumho Petro Chemical |
Kia Corp and Kumho Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kia Corp and Kumho Petro
The main advantage of trading using opposite Kia Corp and Kumho Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kia Corp position performs unexpectedly, Kumho Petro 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 Kumho Petro will offset losses from the drop in Kumho Petro's long position.| Kia Corp vs. Daou Technology | Kia Corp vs. Eugene Technology CoLtd | Kia Corp vs. Digital Imaging Technology | Kia Corp vs. AeroSpace Technology of |
| Kumho Petro vs. Hanmi Semiconductor Co | Kumho Petro vs. PI Advanced Materials | Kumho Petro vs. Hyosung Advanced Materials | Kumho Petro vs. Asiana Airlines |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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