Correlation Between Korea Petro and Tae Kyung
Can any of the company-specific risk be diversified away by investing in both Korea Petro and Tae Kyung 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 Tae Kyung 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 Tae Kyung Chemical, you can compare the effects of market volatilities on Korea Petro and Tae Kyung 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 Tae Kyung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Petro and Tae Kyung.
Diversification Opportunities for Korea Petro and Tae Kyung
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Korea and Tae is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Korea Petro Chemical and Tae Kyung Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tae Kyung Chemical 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 Tae Kyung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tae Kyung Chemical has no effect on the direction of Korea Petro i.e., Korea Petro and Tae Kyung go up and down completely randomly.
Pair Corralation between Korea Petro and Tae Kyung
Assuming the 90 days trading horizon Korea Petro Chemical is expected to under-perform the Tae Kyung. In addition to that, Korea Petro is 1.95 times more volatile than Tae Kyung Chemical. It trades about -0.32 of its total potential returns per unit of risk. Tae Kyung Chemical is currently generating about 0.07 per unit of volatility. If you would invest 1,080,000 in Tae Kyung Chemical on August 31, 2024 and sell it today you would earn a total of 20,000 from holding Tae Kyung Chemical or generate 1.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Petro Chemical vs. Tae Kyung Chemical
Performance |
| Timeline |
| Korea Petro Chemical |
| Tae Kyung Chemical |
Korea Petro and Tae Kyung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Petro and Tae Kyung
The main advantage of trading using opposite Korea Petro and Tae Kyung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Petro position performs unexpectedly, Tae Kyung 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 Tae Kyung will offset losses from the drop in Tae Kyung's long position.| Korea Petro vs. LG Chemicals | Korea Petro vs. POSCO Holdings | Korea Petro vs. Hanwha Solutions | Korea Petro vs. Lotte Chemical Corp |
| Tae Kyung vs. Semyung Electric Machinery | Tae Kyung vs. Dongwoo Farm To | Tae Kyung vs. Hanshin Construction Co | Tae Kyung vs. Daedong Metals 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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