Correlation Between Daiyang Metal and Korea Petro
Can any of the company-specific risk be diversified away by investing in both Daiyang Metal and Korea Petro 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 Daiyang Metal and Korea Petro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daiyang Metal Co and Korea Petro Chemical, you can compare the effects of market volatilities on Daiyang Metal and Korea Petro 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 Daiyang Metal with a short position of Korea Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daiyang Metal and Korea Petro.
Diversification Opportunities for Daiyang Metal and Korea Petro
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Daiyang and Korea is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Daiyang Metal Co and Korea Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Petro Chemical and Daiyang Metal 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 Daiyang Metal Co are associated (or correlated) with Korea Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Petro Chemical has no effect on the direction of Daiyang Metal i.e., Daiyang Metal and Korea Petro go up and down completely randomly.
Pair Corralation between Daiyang Metal and Korea Petro
Assuming the 90 days trading horizon Daiyang Metal Co is expected to under-perform the Korea Petro. In addition to that, Daiyang Metal is 1.93 times more volatile than Korea Petro Chemical. It trades about -0.02 of its total potential returns per unit of risk. Korea Petro Chemical is currently generating about -0.03 per unit of volatility. If you would invest 14,048,200 in Korea Petro Chemical on August 29, 2024 and sell it today you would lose (5,328,200) from holding Korea Petro Chemical or give up 37.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.69% |
| Values | Daily Returns |
Daiyang Metal Co vs. Korea Petro Chemical
Performance |
| Timeline |
| Daiyang Metal |
| Korea Petro Chemical |
Daiyang Metal and Korea Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daiyang Metal and Korea Petro
The main advantage of trading using opposite Daiyang Metal and Korea Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daiyang Metal position performs unexpectedly, Korea Petro 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 Petro will offset losses from the drop in Korea Petro's long position.| Daiyang Metal vs. SCI Information Service | Daiyang Metal vs. Hyosung Advanced Materials | Daiyang Metal vs. LS Materials | Daiyang Metal vs. System and Application |
| Korea Petro vs. LG Chemicals | Korea Petro vs. Lotte Chemical Corp | Korea Petro vs. Hyundai Steel | Korea Petro vs. Seah Steel Corp |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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