Correlation Between Korea Petro and Iljin Display
Can any of the company-specific risk be diversified away by investing in both Korea Petro and Iljin Display 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 Iljin Display 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 Iljin Display, you can compare the effects of market volatilities on Korea Petro and Iljin Display 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 Iljin Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Petro and Iljin Display.
Diversification Opportunities for Korea Petro and Iljin Display
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Iljin is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Korea Petro Chemical and Iljin Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iljin Display 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 Iljin Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iljin Display has no effect on the direction of Korea Petro i.e., Korea Petro and Iljin Display go up and down completely randomly.
Pair Corralation between Korea Petro and Iljin Display
Assuming the 90 days trading horizon Korea Petro Chemical is expected to under-perform the Iljin Display. In addition to that, Korea Petro is 2.42 times more volatile than Iljin Display. It trades about -0.33 of its total potential returns per unit of risk. Iljin Display is currently generating about -0.27 per unit of volatility. If you would invest 91,100 in Iljin Display on August 29, 2024 and sell it today you would lose (5,400) from holding Iljin Display or give up 5.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Petro Chemical vs. Iljin Display
Performance |
| Timeline |
| Korea Petro Chemical |
| Iljin Display |
Korea Petro and Iljin Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Petro and Iljin Display
The main advantage of trading using opposite Korea Petro and Iljin Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Petro position performs unexpectedly, Iljin Display 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 Iljin Display will offset losses from the drop in Iljin Display's long position.| Korea Petro vs. LG Chemicals | Korea Petro vs. Lotte Chemical Corp | Korea Petro vs. Hyundai Steel | Korea Petro vs. Seah Steel Corp |
| Iljin Display vs. Kukdo Chemical Co | Iljin Display vs. SK Chemicals Co | Iljin Display vs. Youl Chon Chemical | Iljin Display vs. Korea Petro Chemical |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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