Correlation Between Korea Petro and Samlip General
Can any of the company-specific risk be diversified away by investing in both Korea Petro and Samlip General 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 Samlip General 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 Samlip General Foods, you can compare the effects of market volatilities on Korea Petro and Samlip General 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 Samlip General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Petro and Samlip General.
Diversification Opportunities for Korea Petro and Samlip General
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Samlip is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Korea Petro Chemical and Samlip General Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samlip General Foods 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 Samlip General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samlip General Foods has no effect on the direction of Korea Petro i.e., Korea Petro and Samlip General go up and down completely randomly.
Pair Corralation between Korea Petro and Samlip General
Assuming the 90 days trading horizon Korea Petro Chemical is expected to under-perform the Samlip General. In addition to that, Korea Petro is 1.99 times more volatile than Samlip General Foods. It trades about -0.1 of its total potential returns per unit of risk. Samlip General Foods is currently generating about -0.07 per unit of volatility. If you would invest 5,770,000 in Samlip General Foods on September 3, 2024 and sell it today you would lose (1,060,000) from holding Samlip General Foods or give up 18.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Petro Chemical vs. Samlip General Foods
Performance |
| Timeline |
| Korea Petro Chemical |
| Samlip General Foods |
Korea Petro and Samlip General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Petro and Samlip General
The main advantage of trading using opposite Korea Petro and Samlip General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Petro position performs unexpectedly, Samlip General 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 Samlip General will offset losses from the drop in Samlip General's long position.| Korea Petro vs. Lotte Non Life Insurance | Korea Petro vs. Dong A Steel Technology | Korea Petro vs. Samsung Life Insurance | Korea Petro vs. Jb Financial |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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