Correlation Between Kukdo Chemical and Sungdo Engineering
Can any of the company-specific risk be diversified away by investing in both Kukdo Chemical and Sungdo Engineering 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 Kukdo Chemical and Sungdo Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kukdo Chemical and Sungdo Engineering Construction, you can compare the effects of market volatilities on Kukdo Chemical and Sungdo Engineering 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 Kukdo Chemical with a short position of Sungdo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdo Chemical and Sungdo Engineering.
Diversification Opportunities for Kukdo Chemical and Sungdo Engineering
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kukdo and Sungdo is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kukdo Chemical and Sungdo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungdo Engineering and Kukdo Chemical 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 Kukdo Chemical are associated (or correlated) with Sungdo Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungdo Engineering has no effect on the direction of Kukdo Chemical i.e., Kukdo Chemical and Sungdo Engineering go up and down completely randomly.
Pair Corralation between Kukdo Chemical and Sungdo Engineering
Assuming the 90 days trading horizon Kukdo Chemical is expected to under-perform the Sungdo Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Kukdo Chemical is 1.6 times less risky than Sungdo Engineering. The stock trades about -0.06 of its potential returns per unit of risk. The Sungdo Engineering Construction is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 463,000 in Sungdo Engineering Construction on September 5, 2024 and sell it today you would lose (14,000) from holding Sungdo Engineering Construction or give up 3.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kukdo Chemical vs. Sungdo Engineering Constructio
Performance |
| Timeline |
| Kukdo Chemical |
| Sungdo Engineering |
Kukdo Chemical and Sungdo Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdo Chemical and Sungdo Engineering
The main advantage of trading using opposite Kukdo Chemical and Sungdo Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdo Chemical position performs unexpectedly, Sungdo Engineering 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 Sungdo Engineering will offset losses from the drop in Sungdo Engineering's long position.| Kukdo Chemical vs. Sungdo Engineering Construction | Kukdo Chemical vs. Hanshin Construction Co | Kukdo Chemical vs. HJ ShipBuilding Construction | Kukdo Chemical vs. Semyung Electric Machinery |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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