Correlation Between Korea Petro and BYON
Can any of the company-specific risk be diversified away by investing in both Korea Petro and BYON 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 BYON 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 BYON Co, you can compare the effects of market volatilities on Korea Petro and BYON 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 BYON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Petro and BYON.
Diversification Opportunities for Korea Petro and BYON
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Korea and BYON is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Korea Petro Chemical and BYON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYON 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 BYON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYON has no effect on the direction of Korea Petro i.e., Korea Petro and BYON go up and down completely randomly.
Pair Corralation between Korea Petro and BYON
Assuming the 90 days trading horizon Korea Petro Chemical is expected to under-perform the BYON. But the stock apears to be less risky and, when comparing its historical volatility, Korea Petro Chemical is 1.63 times less risky than BYON. The stock trades about -0.1 of its potential returns per unit of risk. The BYON Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 67,000 in BYON Co on September 13, 2024 and sell it today you would earn a total of 400.00 from holding BYON Co or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Petro Chemical vs. BYON Co
Performance |
| Timeline |
| Korea Petro Chemical |
| BYON |
Korea Petro and BYON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Petro and BYON
The main advantage of trading using opposite Korea Petro and BYON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Petro position performs unexpectedly, BYON 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 BYON will offset losses from the drop in BYON's long position.| Korea Petro vs. LG Chemicals | Korea Petro vs. POSCO Holdings | Korea Petro vs. Hanwha Solutions | Korea Petro vs. Lotte Chemical Corp |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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