Correlation Between Dongwon Ind and Kumho Petro
Can any of the company-specific risk be diversified away by investing in both Dongwon Ind 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 Dongwon Ind and Kumho Petro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongwon Ind and Kumho Petro Chemical, you can compare the effects of market volatilities on Dongwon Ind 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 Dongwon Ind with a short position of Kumho Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwon Ind and Kumho Petro.
Diversification Opportunities for Dongwon Ind and Kumho Petro
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dongwon and Kumho is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon Ind 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 Dongwon Ind 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 Dongwon Ind 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 Dongwon Ind i.e., Dongwon Ind and Kumho Petro go up and down completely randomly.
Pair Corralation between Dongwon Ind and Kumho Petro
Assuming the 90 days trading horizon Dongwon Ind is expected to generate 0.57 times more return on investment than Kumho Petro. However, Dongwon Ind is 1.76 times less risky than Kumho Petro. It trades about 0.04 of its potential returns per unit of risk. Kumho Petro Chemical is currently generating about -0.09 per unit of risk. If you would invest 3,263,636 in Dongwon Ind on October 17, 2024 and sell it today you would earn a total of 236,364 from holding Dongwon Ind or generate 7.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.29% |
| Values | Daily Returns |
Dongwon Ind vs. Kumho Petro Chemical
Performance |
| Timeline |
| Dongwon Ind |
| Kumho Petro Chemical |
Dongwon Ind and Kumho Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwon Ind and Kumho Petro
The main advantage of trading using opposite Dongwon Ind and Kumho Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwon Ind 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.| Dongwon Ind vs. Samsung Electronics Co | Dongwon Ind vs. Samsung Electronics Co | Dongwon Ind vs. KB Financial Group | Dongwon Ind vs. Shinhan Financial Group |
| Kumho Petro vs. System and Application | Kumho Petro vs. KakaoBank Corp | Kumho Petro vs. Settlebank | Kumho Petro 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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