Correlation Between Kukdo Chemical and Seoam Machinery
Can any of the company-specific risk be diversified away by investing in both Kukdo Chemical and Seoam Machinery 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 Seoam Machinery 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 Seoam Machinery Industry, you can compare the effects of market volatilities on Kukdo Chemical and Seoam Machinery 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 Seoam Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdo Chemical and Seoam Machinery.
Diversification Opportunities for Kukdo Chemical and Seoam Machinery
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kukdo and Seoam is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kukdo Chemical Co and Seoam Machinery Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoam Machinery Industry 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 Seoam Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoam Machinery Industry has no effect on the direction of Kukdo Chemical i.e., Kukdo Chemical and Seoam Machinery go up and down completely randomly.
Pair Corralation between Kukdo Chemical and Seoam Machinery
Assuming the 90 days trading horizon Kukdo Chemical Co is expected to generate 1.15 times more return on investment than Seoam Machinery. However, Kukdo Chemical is 1.15 times more volatile than Seoam Machinery Industry. It trades about 0.44 of its potential returns per unit of risk. Seoam Machinery Industry is currently generating about 0.31 per unit of risk. If you would invest 2,735,000 in Kukdo Chemical Co on October 11, 2024 and sell it today you would earn a total of 560,000 from holding Kukdo Chemical Co or generate 20.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kukdo Chemical Co vs. Seoam Machinery Industry
Performance |
| Timeline |
| Kukdo Chemical |
| Seoam Machinery Industry |
Kukdo Chemical and Seoam Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdo Chemical and Seoam Machinery
The main advantage of trading using opposite Kukdo Chemical and Seoam Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdo Chemical position performs unexpectedly, Seoam Machinery 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 Seoam Machinery will offset losses from the drop in Seoam Machinery's long position.| Kukdo Chemical vs. Hankook Furniture Co | Kukdo Chemical vs. Sungchang Autotech Co | Kukdo Chemical vs. Homecast CoLtd | Kukdo Chemical vs. SS TECH |
| Seoam Machinery vs. Homecast CoLtd | Seoam Machinery vs. CJ Seafood Corp | Seoam Machinery vs. KT Submarine Telecom | Seoam Machinery vs. Samlip General Foods |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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