Correlation Between Korea Industrial and Korea Petro
Can any of the company-specific risk be diversified away by investing in both Korea Industrial and Korea 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 Korea Industrial and Korea Petro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Industrial Co and Korea Petro Chemical, you can compare the effects of market volatilities on Korea Industrial and Korea 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 Korea Industrial with a short position of Korea Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Industrial and Korea Petro.
Diversification Opportunities for Korea Industrial and Korea Petro
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Korea is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Korea Industrial Co and Korea Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Petro Chemical and Korea Industrial 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 Korea Industrial Co are associated (or correlated) with Korea Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Petro Chemical has no effect on the direction of Korea Industrial i.e., Korea Industrial and Korea Petro go up and down completely randomly.
Pair Corralation between Korea Industrial and Korea Petro
Assuming the 90 days trading horizon Korea Industrial is expected to generate 3.53 times less return on investment than Korea Petro. But when comparing it to its historical volatility, Korea Industrial Co is 2.3 times less risky than Korea Petro. It trades about 0.16 of its potential returns per unit of risk. Korea Petro Chemical is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 8,120,000 in Korea Petro Chemical on November 4, 2024 and sell it today you would earn a total of 990,000 from holding Korea Petro Chemical or generate 12.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Industrial Co vs. Korea Petro Chemical
Performance |
| Timeline |
| Korea Industrial |
| Korea Petro Chemical |
Korea Industrial and Korea Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Industrial and Korea Petro
The main advantage of trading using opposite Korea Industrial and Korea Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Industrial position performs unexpectedly, Korea 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 Korea Petro will offset losses from the drop in Korea Petro's long position.| Korea Industrial vs. Heungkuk Metaltech CoLtd | Korea Industrial vs. TK Chemical | Korea Industrial vs. Youngbo Chemical Co | Korea Industrial vs. SH Energy Chemical |
| Korea Petro vs. Samyoung Electronics Co | Korea Petro vs. Daewoo Electronic Components | Korea Petro vs. Guyoung Technology Co | Korea Petro vs. Seers Technology |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |