Correlation Between Korea Petro and Histeel
Can any of the company-specific risk be diversified away by investing in both Korea Petro and Histeel 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 Histeel 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 Histeel, you can compare the effects of market volatilities on Korea Petro and Histeel 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 Histeel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Petro and Histeel.
Diversification Opportunities for Korea Petro and Histeel
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Histeel is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Korea Petro Chemical and Histeel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Histeel 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 Histeel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Histeel has no effect on the direction of Korea Petro i.e., Korea Petro and Histeel go up and down completely randomly.
Pair Corralation between Korea Petro and Histeel
Assuming the 90 days trading horizon Korea Petro Chemical is expected to generate 1.18 times more return on investment than Histeel. However, Korea Petro is 1.18 times more volatile than Histeel. It trades about 0.19 of its potential returns per unit of risk. Histeel is currently generating about 0.1 per unit of risk. If you would invest 9,110,000 in Korea Petro Chemical on November 27, 2024 and sell it today you would earn a total of 1,000,000 from holding Korea Petro Chemical or generate 10.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Petro Chemical vs. Histeel
Performance |
| Timeline |
| Korea Petro Chemical |
| Histeel |
Korea Petro and Histeel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Petro and Histeel
The main advantage of trading using opposite Korea Petro and Histeel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Petro position performs unexpectedly, Histeel 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 Histeel will offset losses from the drop in Histeel's long position.| Korea Petro vs. Samyoung Electronics Co | Korea Petro vs. Korea Electronic Certification | Korea Petro vs. Sungho Electronics Corp | Korea Petro vs. TJ media Co |
| Histeel vs. Coloray International Investment | Histeel vs. Infinitt Healthcare Co | Histeel vs. SBI Investment KOREA | Histeel vs. NH Investment Securities |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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