Correlation Between Kukdo Chemical and Korea New
Can any of the company-specific risk be diversified away by investing in both Kukdo Chemical and Korea New 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 Korea New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kukdo Chemical Co and Korea New Network, you can compare the effects of market volatilities on Kukdo Chemical and Korea New 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 Korea New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdo Chemical and Korea New.
Diversification Opportunities for Kukdo Chemical and Korea New
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kukdo and Korea is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Kukdo Chemical Co and Korea New Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea New Network 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 Co are associated (or correlated) with Korea New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea New Network has no effect on the direction of Kukdo Chemical i.e., Kukdo Chemical and Korea New go up and down completely randomly.
Pair Corralation between Kukdo Chemical and Korea New
Assuming the 90 days trading horizon Kukdo Chemical Co is expected to under-perform the Korea New. But the stock apears to be less risky and, when comparing its historical volatility, Kukdo Chemical Co is 1.58 times less risky than Korea New. The stock trades about -0.33 of its potential returns per unit of risk. The Korea New Network is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 78,000 in Korea New Network on September 12, 2024 and sell it today you would earn a total of 8,000 from holding Korea New Network or generate 10.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kukdo Chemical Co vs. Korea New Network
Performance |
| Timeline |
| Kukdo Chemical |
| Korea New Network |
Kukdo Chemical and Korea New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdo Chemical and Korea New
The main advantage of trading using opposite Kukdo Chemical and Korea New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdo Chemical position performs unexpectedly, Korea New 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 New will offset losses from the drop in Korea New's long position.| Kukdo Chemical vs. Samsung Electronics Co | Kukdo Chemical vs. Samsung Electronics Co | Kukdo Chemical vs. SK Hynix | Kukdo Chemical vs. POSCO Holdings |
| Korea New vs. BGF Retail Co | Korea New vs. LG Display Co | Korea New vs. Grand Korea Leisure | Korea New vs. Lake Materials 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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