Correlation Between Korea Petro and Sambo Corrugated
Can any of the company-specific risk be diversified away by investing in both Korea Petro and Sambo Corrugated 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 Sambo Corrugated 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 Sambo Corrugated Board, you can compare the effects of market volatilities on Korea Petro and Sambo Corrugated 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 Sambo Corrugated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Petro and Sambo Corrugated.
Diversification Opportunities for Korea Petro and Sambo Corrugated
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Korea and Sambo is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Korea Petro Chemical and Sambo Corrugated Board in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sambo Corrugated Board 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 Sambo Corrugated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sambo Corrugated Board has no effect on the direction of Korea Petro i.e., Korea Petro and Sambo Corrugated go up and down completely randomly.
Pair Corralation between Korea Petro and Sambo Corrugated
Assuming the 90 days trading horizon Korea Petro Chemical is expected to under-perform the Sambo Corrugated. In addition to that, Korea Petro is 3.04 times more volatile than Sambo Corrugated Board. It trades about -0.38 of its total potential returns per unit of risk. Sambo Corrugated Board is currently generating about -0.24 per unit of volatility. If you would invest 905,000 in Sambo Corrugated Board on September 5, 2024 and sell it today you would lose (42,000) from holding Sambo Corrugated Board or give up 4.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Petro Chemical vs. Sambo Corrugated Board
Performance |
| Timeline |
| Korea Petro Chemical |
| Sambo Corrugated Board |
Korea Petro and Sambo Corrugated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Petro and Sambo Corrugated
The main advantage of trading using opposite Korea Petro and Sambo Corrugated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Petro position performs unexpectedly, Sambo Corrugated 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 Sambo Corrugated will offset losses from the drop in Sambo Corrugated's long position.| Korea Petro vs. LG Chemicals | Korea Petro vs. Lotte Chemical Corp | Korea Petro vs. Hyundai Steel | Korea Petro vs. Dongkuk Steel Mill |
| Sambo Corrugated vs. Hanil Iron Steel | Sambo Corrugated vs. Pungguk Ethanol Industrial | Sambo Corrugated vs. Dongbu Steel Co | Sambo Corrugated vs. Aprogen Healthcare Games |
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 CEOs Directory module to screen CEOs from public companies around the world.
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