Correlation Between Kukdo Chemical and Microfriend
Can any of the company-specific risk be diversified away by investing in both Kukdo Chemical and Microfriend 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 Microfriend 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 Microfriend, you can compare the effects of market volatilities on Kukdo Chemical and Microfriend 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 Microfriend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdo Chemical and Microfriend.
Diversification Opportunities for Kukdo Chemical and Microfriend
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kukdo and Microfriend is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kukdo Chemical Co and Microfriend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microfriend 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 Microfriend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microfriend has no effect on the direction of Kukdo Chemical i.e., Kukdo Chemical and Microfriend go up and down completely randomly.
Pair Corralation between Kukdo Chemical and Microfriend
Assuming the 90 days trading horizon Kukdo Chemical Co is expected to under-perform the Microfriend. But the stock apears to be less risky and, when comparing its historical volatility, Kukdo Chemical Co is 1.96 times less risky than Microfriend. The stock trades about -0.07 of its potential returns per unit of risk. The Microfriend is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 513,000 in Microfriend on September 12, 2024 and sell it today you would lose (240,000) from holding Microfriend or give up 46.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kukdo Chemical Co vs. Microfriend
Performance |
| Timeline |
| Kukdo Chemical |
| Microfriend |
Kukdo Chemical and Microfriend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdo Chemical and Microfriend
The main advantage of trading using opposite Kukdo Chemical and Microfriend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdo Chemical position performs unexpectedly, Microfriend 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 Microfriend will offset losses from the drop in Microfriend'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 |
| Microfriend vs. Hansol Chemical Co | Microfriend vs. Kukdo Chemical Co | Microfriend vs. Jinro Distillers Co | Microfriend vs. InnoTherapy |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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