Correlation Between Korea Petro and Dongil Metal
Can any of the company-specific risk be diversified away by investing in both Korea Petro and Dongil Metal 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 Dongil Metal 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 Dongil Metal Co, you can compare the effects of market volatilities on Korea Petro and Dongil Metal 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 Dongil Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Petro and Dongil Metal.
Diversification Opportunities for Korea Petro and Dongil Metal
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Korea and Dongil is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Korea Petro Chemical and Dongil Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongil Metal 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 Dongil Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongil Metal has no effect on the direction of Korea Petro i.e., Korea Petro and Dongil Metal go up and down completely randomly.
Pair Corralation between Korea Petro and Dongil Metal
Assuming the 90 days trading horizon Korea Petro Chemical is expected to generate 1.15 times more return on investment than Dongil Metal. However, Korea Petro is 1.15 times more volatile than Dongil Metal Co. It trades about -0.04 of its potential returns per unit of risk. Dongil Metal Co is currently generating about -0.07 per unit of risk. If you would invest 17,058,600 in Korea Petro Chemical on October 16, 2024 and sell it today you would lose (8,738,600) from holding Korea Petro Chemical or give up 51.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.51% |
| Values | Daily Returns |
Korea Petro Chemical vs. Dongil Metal Co
Performance |
| Timeline |
| Korea Petro Chemical |
| Dongil Metal |
Korea Petro and Dongil Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Petro and Dongil Metal
The main advantage of trading using opposite Korea Petro and Dongil Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Petro position performs unexpectedly, Dongil Metal 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 Dongil Metal will offset losses from the drop in Dongil Metal's long position.| Korea Petro vs. Mgame Corp | Korea Petro vs. Daewon Media Co | Korea Petro vs. DoubleU Games Co | Korea Petro vs. MediaZen |
| Dongil Metal vs. Korea Petro Chemical | Dongil Metal vs. SKONEC Entertainment Co | Dongil Metal vs. Pan Entertainment Co | Dongil Metal vs. TJ media 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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