Correlation Between Tae Kyung and Korea Petro
Can any of the company-specific risk be diversified away by investing in both Tae Kyung and Korea Petro 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 Tae Kyung and Korea Petro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tae Kyung Chemical and Korea Petro Chemical, you can compare the effects of market volatilities on Tae Kyung and Korea Petro 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 Tae Kyung with a short position of Korea Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tae Kyung and Korea Petro.
Diversification Opportunities for Tae Kyung and Korea Petro
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Tae and Korea is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Tae Kyung Chemical and Korea Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Petro Chemical and Tae Kyung 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 Tae Kyung Chemical are associated (or correlated) with Korea Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Petro Chemical has no effect on the direction of Tae Kyung i.e., Tae Kyung and Korea Petro go up and down completely randomly.
Pair Corralation between Tae Kyung and Korea Petro
Assuming the 90 days trading horizon Tae Kyung Chemical is expected to generate 0.67 times more return on investment than Korea Petro. However, Tae Kyung Chemical is 1.5 times less risky than Korea Petro. It trades about -0.02 of its potential returns per unit of risk. Korea Petro Chemical is currently generating about -0.04 per unit of risk. If you would invest 1,293,752 in Tae Kyung Chemical on October 24, 2024 and sell it today you would lose (180,752) from holding Tae Kyung Chemical or give up 13.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tae Kyung Chemical vs. Korea Petro Chemical
Performance |
| Timeline |
| Tae Kyung Chemical |
| Korea Petro Chemical |
Tae Kyung and Korea Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tae Kyung and Korea Petro
The main advantage of trading using opposite Tae Kyung and Korea Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tae Kyung position performs unexpectedly, Korea Petro 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 Korea Petro will offset losses from the drop in Korea Petro's long position.| Tae Kyung vs. AptaBio Therapeutics | Tae Kyung vs. Daewoo SBI SPAC | Tae Kyung vs. Dream Security co | Tae Kyung vs. Microfriend |
| Korea Petro vs. LEENO Industrial | Korea Petro vs. Namhwa Industrial Co | Korea Petro vs. Phoenix Materials Co | Korea Petro vs. Korea 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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