Correlation Between Kia Corp and SK Chemicals
Can any of the company-specific risk be diversified away by investing in both Kia Corp and SK Chemicals 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 SK Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kia Corp and SK Chemicals Co, you can compare the effects of market volatilities on Kia Corp and SK Chemicals 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 SK Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kia Corp and SK Chemicals.
Diversification Opportunities for Kia Corp and SK Chemicals
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kia and 28513K is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kia Corp and SK Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Chemicals 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 SK Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Chemicals has no effect on the direction of Kia Corp i.e., Kia Corp and SK Chemicals go up and down completely randomly.
Pair Corralation between Kia Corp and SK Chemicals
Assuming the 90 days trading horizon Kia Corp is expected to generate 1.49 times more return on investment than SK Chemicals. However, Kia Corp is 1.49 times more volatile than SK Chemicals Co. It trades about 0.02 of its potential returns per unit of risk. SK Chemicals Co is currently generating about -0.26 per unit of risk. If you would invest 10,160,000 in Kia Corp on November 3, 2024 and sell it today you would earn a total of 40,000 from holding Kia Corp or generate 0.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kia Corp vs. SK Chemicals Co
Performance |
| Timeline |
| Kia Corp |
| SK Chemicals |
Kia Corp and SK Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kia Corp and SK Chemicals
The main advantage of trading using opposite Kia Corp and SK Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kia Corp position performs unexpectedly, SK Chemicals 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 SK Chemicals will offset losses from the drop in SK Chemicals' long position.| Kia Corp vs. Jeju Bank | Kia Corp vs. Nature and Environment | Kia Corp vs. Lotte Non Life Insurance | Kia Corp vs. Hyundai BNG Steel |
| SK Chemicals vs. Mobile Appliance | SK Chemicals vs. Dongkuk Structures Construction | SK Chemicals vs. Kyeryong Construction Industrial | SK Chemicals vs. Lotte Data Communication |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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