Correlation Between Korea Refractories and Kukdo Chemical
Can any of the company-specific risk be diversified away by investing in both Korea Refractories and Kukdo Chemical 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 Korea Refractories and Kukdo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Refractories Co and Kukdo Chemical Co, you can compare the effects of market volatilities on Korea Refractories and Kukdo Chemical 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 Korea Refractories with a short position of Kukdo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Refractories and Kukdo Chemical.
Diversification Opportunities for Korea Refractories and Kukdo Chemical
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Kukdo is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Korea Refractories Co and Kukdo Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukdo Chemical and Korea Refractories 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 Korea Refractories Co are associated (or correlated) with Kukdo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukdo Chemical has no effect on the direction of Korea Refractories i.e., Korea Refractories and Kukdo Chemical go up and down completely randomly.
Pair Corralation between Korea Refractories and Kukdo Chemical
Assuming the 90 days trading horizon Korea Refractories Co is expected to generate 0.87 times more return on investment than Kukdo Chemical. However, Korea Refractories Co is 1.15 times less risky than Kukdo Chemical. It trades about -0.04 of its potential returns per unit of risk. Kukdo Chemical Co is currently generating about -0.1 per unit of risk. If you would invest 221,500 in Korea Refractories Co on September 2, 2024 and sell it today you would lose (9,500) from holding Korea Refractories Co or give up 4.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Refractories Co vs. Kukdo Chemical Co
Performance |
| Timeline |
| Korea Refractories |
| Kukdo Chemical |
Korea Refractories and Kukdo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Refractories and Kukdo Chemical
The main advantage of trading using opposite Korea Refractories and Kukdo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Refractories position performs unexpectedly, Kukdo Chemical 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 Kukdo Chemical will offset losses from the drop in Kukdo Chemical's long position.| Korea Refractories vs. FOODWELL Co | Korea Refractories vs. Seoul Food Industrial | Korea Refractories vs. Seoul Broadcasting System | Korea Refractories vs. CJ Seafood Corp |
| Kukdo Chemical vs. AptaBio Therapeutics | Kukdo Chemical vs. Daewoo SBI SPAC | Kukdo Chemical vs. Dream Security co | Kukdo Chemical vs. Microfriend |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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