Correlation Between Korea Petro and Seoul Food
Can any of the company-specific risk be diversified away by investing in both Korea Petro and Seoul Food 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 Petro and Seoul Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Petro Chemical and Seoul Food Industrial, you can compare the effects of market volatilities on Korea Petro and Seoul Food 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 Petro with a short position of Seoul Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Petro and Seoul Food.
Diversification Opportunities for Korea Petro and Seoul Food
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Seoul is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Korea Petro Chemical and Seoul Food Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Food Industrial and Korea Petro 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 Petro Chemical are associated (or correlated) with Seoul Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Food Industrial has no effect on the direction of Korea Petro i.e., Korea Petro and Seoul Food go up and down completely randomly.
Pair Corralation between Korea Petro and Seoul Food
Assuming the 90 days trading horizon Korea Petro Chemical is expected to under-perform the Seoul Food. In addition to that, Korea Petro is 3.24 times more volatile than Seoul Food Industrial. It trades about -0.01 of its total potential returns per unit of risk. Seoul Food Industrial is currently generating about 0.01 per unit of volatility. If you would invest 14,500 in Seoul Food Industrial on December 1, 2024 and sell it today you would earn a total of 0.00 from holding Seoul Food Industrial or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Petro Chemical vs. Seoul Food Industrial
Performance |
| Timeline |
| Korea Petro Chemical |
| Seoul Food Industrial |
Korea Petro and Seoul Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Petro and Seoul Food
The main advantage of trading using opposite Korea Petro and Seoul Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Petro position performs unexpectedly, Seoul Food 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 Seoul Food will offset losses from the drop in Seoul Food's long position.| Korea Petro vs. NewFlex Technology Co | Korea Petro vs. Sewoon Medical Co | Korea Petro vs. Visang Education | Korea Petro vs. Vina Technology Co |
| Seoul Food vs. Daedong Metals Co | Seoul Food vs. Hanjoo Light Metal | Seoul Food vs. MetaLabs Co | Seoul Food vs. Daejung Chemicals Metals |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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