Correlation Between Korea Petro and S Fuelcell
Can any of the company-specific risk be diversified away by investing in both Korea Petro and S Fuelcell 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 S Fuelcell 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 S Fuelcell co, you can compare the effects of market volatilities on Korea Petro and S Fuelcell 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 S Fuelcell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Petro and S Fuelcell.
Diversification Opportunities for Korea Petro and S Fuelcell
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Korea and 288620 is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Korea Petro Chemical and S Fuelcell co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on S Fuelcell co 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 S Fuelcell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of S Fuelcell co has no effect on the direction of Korea Petro i.e., Korea Petro and S Fuelcell go up and down completely randomly.
Pair Corralation between Korea Petro and S Fuelcell
Assuming the 90 days trading horizon Korea Petro Chemical is expected to generate 1.74 times more return on investment than S Fuelcell. However, Korea Petro is 1.74 times more volatile than S Fuelcell co. It trades about 0.3 of its potential returns per unit of risk. S Fuelcell co is currently generating about 0.08 per unit of risk. If you would invest 7,960,000 in Korea Petro Chemical on October 24, 2024 and sell it today you would earn a total of 1,390,000 from holding Korea Petro Chemical or generate 17.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Petro Chemical vs. S Fuelcell co
Performance |
| Timeline |
| Korea Petro Chemical |
| S Fuelcell co |
Korea Petro and S Fuelcell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Petro and S Fuelcell
The main advantage of trading using opposite Korea Petro and S Fuelcell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Petro position performs unexpectedly, S Fuelcell 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 S Fuelcell will offset losses from the drop in S Fuelcell's long position.| Korea Petro vs. LEENO Industrial | Korea Petro vs. Namhwa Industrial Co | Korea Petro vs. Phoenix Materials Co | Korea Petro vs. Korea Industrial Co |
| S Fuelcell vs. Korea Petro Chemical | S Fuelcell vs. LG Household Healthcare | S Fuelcell vs. Youl Chon Chemical | S Fuelcell vs. Tae Kyung Chemical |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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