Correlation Between Sangsangin Investment and Kumho Petro
Can any of the company-specific risk be diversified away by investing in both Sangsangin Investment 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 Sangsangin Investment and Kumho Petro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sangsangin Investment Securities and Kumho Petro Chemical, you can compare the effects of market volatilities on Sangsangin Investment 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 Sangsangin Investment with a short position of Kumho Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sangsangin Investment and Kumho Petro.
Diversification Opportunities for Sangsangin Investment and Kumho Petro
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sangsangin and Kumho is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sangsangin Investment Securiti 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 Sangsangin Investment 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 Sangsangin Investment Securities 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 Sangsangin Investment i.e., Sangsangin Investment and Kumho Petro go up and down completely randomly.
Pair Corralation between Sangsangin Investment and Kumho Petro
Assuming the 90 days trading horizon Sangsangin Investment Securities is expected to generate 0.88 times more return on investment than Kumho Petro. However, Sangsangin Investment Securities is 1.14 times less risky than Kumho Petro. It trades about -0.2 of its potential returns per unit of risk. Kumho Petro Chemical is currently generating about -0.24 per unit of risk. If you would invest 44,800 in Sangsangin Investment Securities on September 12, 2024 and sell it today you would lose (3,500) from holding Sangsangin Investment Securities or give up 7.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sangsangin Investment Securiti vs. Kumho Petro Chemical
Performance |
| Timeline |
| Sangsangin Investment |
| Kumho Petro Chemical |
Sangsangin Investment and Kumho Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sangsangin Investment and Kumho Petro
The main advantage of trading using opposite Sangsangin Investment and Kumho Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sangsangin Investment 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.| Sangsangin Investment vs. KB Financial Group | Sangsangin Investment vs. Shinhan Financial Group | Sangsangin Investment vs. Hana Financial | Sangsangin Investment vs. Woori Financial Group |
| Kumho Petro vs. Seoul Electronics Telecom | Kumho Petro vs. SK Chemicals Co | Kumho Petro vs. Kisan Telecom Co | Kumho Petro vs. BIT Computer Co |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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