Correlation Between Korea Petro and Guyoung Technology
Can any of the company-specific risk be diversified away by investing in both Korea Petro and Guyoung Technology 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 Guyoung Technology 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 Guyoung Technology Co, you can compare the effects of market volatilities on Korea Petro and Guyoung Technology 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 Guyoung Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Petro and Guyoung Technology.
Diversification Opportunities for Korea Petro and Guyoung Technology
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Guyoung is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Korea Petro Chemical and Guyoung Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guyoung Technology 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 Guyoung Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guyoung Technology has no effect on the direction of Korea Petro i.e., Korea Petro and Guyoung Technology go up and down completely randomly.
Pair Corralation between Korea Petro and Guyoung Technology
Assuming the 90 days trading horizon Korea Petro Chemical is expected to generate 1.25 times more return on investment than Guyoung Technology. However, Korea Petro is 1.25 times more volatile than Guyoung Technology Co. It trades about 0.35 of its potential returns per unit of risk. Guyoung Technology Co is currently generating about 0.31 per unit of risk. If you would invest 7,770,000 in Korea Petro Chemical on October 29, 2024 and sell it today you would earn a total of 1,650,000 from holding Korea Petro Chemical or generate 21.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Petro Chemical vs. Guyoung Technology Co
Performance |
| Timeline |
| Korea Petro Chemical |
| Guyoung Technology |
Korea Petro and Guyoung Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Petro and Guyoung Technology
The main advantage of trading using opposite Korea Petro and Guyoung Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Petro position performs unexpectedly, Guyoung Technology 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 Guyoung Technology will offset losses from the drop in Guyoung Technology's long position.| Korea Petro vs. Kakao Games Corp | Korea Petro vs. DB Insurance Co | Korea Petro vs. DoubleU Games Co | Korea Petro vs. Ssangyong Information Communication |
| Guyoung Technology vs. Echomarketing CoLtd | Guyoung Technology vs. SK Chemicals Co | Guyoung Technology vs. Daejung Chemicals Metals | Guyoung Technology vs. Hyunwoo Industrial 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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