Correlation Between Kukdo Chemical and INNOX Advanced
Can any of the company-specific risk be diversified away by investing in both Kukdo Chemical and INNOX Advanced 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 INNOX Advanced 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 INNOX Advanced Materials, you can compare the effects of market volatilities on Kukdo Chemical and INNOX Advanced 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 INNOX Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdo Chemical and INNOX Advanced.
Diversification Opportunities for Kukdo Chemical and INNOX Advanced
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kukdo and INNOX is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Kukdo Chemical Co and INNOX Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INNOX Advanced Materials 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 INNOX Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INNOX Advanced Materials has no effect on the direction of Kukdo Chemical i.e., Kukdo Chemical and INNOX Advanced go up and down completely randomly.
Pair Corralation between Kukdo Chemical and INNOX Advanced
Assuming the 90 days trading horizon Kukdo Chemical Co is expected to generate 0.75 times more return on investment than INNOX Advanced. However, Kukdo Chemical Co is 1.33 times less risky than INNOX Advanced. It trades about -0.01 of its potential returns per unit of risk. INNOX Advanced Materials is currently generating about -0.01 per unit of risk. If you would invest 4,422,500 in Kukdo Chemical Co on November 27, 2024 and sell it today you would lose (897,500) from holding Kukdo Chemical Co or give up 20.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kukdo Chemical Co vs. INNOX Advanced Materials
Performance |
| Timeline |
| Kukdo Chemical |
| INNOX Advanced Materials |
Kukdo Chemical and INNOX Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdo Chemical and INNOX Advanced
The main advantage of trading using opposite Kukdo Chemical and INNOX Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdo Chemical position performs unexpectedly, INNOX Advanced 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 INNOX Advanced will offset losses from the drop in INNOX Advanced's long position.| Kukdo Chemical vs. Seoul Electronics Telecom | Kukdo Chemical vs. Hotel Shilla Co | Kukdo Chemical vs. Korean Air Lines | Kukdo Chemical vs. Namhae Chemical |
| INNOX Advanced vs. Neungyule Education | INNOX Advanced vs. Korea Information Engineering | INNOX Advanced vs. Hanwha InvestmentSecurities Co | INNOX Advanced vs. DB Financial Investment |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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