Correlation Between Kumho Petro and Dongsuh
Can any of the company-specific risk be diversified away by investing in both Kumho Petro and Dongsuh 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 Kumho Petro and Dongsuh into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kumho Petro Chemical and Dongsuh, you can compare the effects of market volatilities on Kumho Petro and Dongsuh 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 Kumho Petro with a short position of Dongsuh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumho Petro and Dongsuh.
Diversification Opportunities for Kumho Petro and Dongsuh
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kumho and Dongsuh is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Kumho Petro Chemical and Dongsuh in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongsuh and Kumho Petro 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 Kumho Petro Chemical are associated (or correlated) with Dongsuh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongsuh has no effect on the direction of Kumho Petro i.e., Kumho Petro and Dongsuh go up and down completely randomly.
Pair Corralation between Kumho Petro and Dongsuh
Assuming the 90 days trading horizon Kumho Petro Chemical is expected to generate 1.2 times more return on investment than Dongsuh. However, Kumho Petro is 1.2 times more volatile than Dongsuh. It trades about 0.07 of its potential returns per unit of risk. Dongsuh is currently generating about -0.19 per unit of risk. If you would invest 9,840,000 in Kumho Petro Chemical on November 3, 2024 and sell it today you would earn a total of 710,000 from holding Kumho Petro Chemical or generate 7.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.37% |
| Values | Daily Returns |
Kumho Petro Chemical vs. Dongsuh
Performance |
| Timeline |
| Kumho Petro Chemical |
| Dongsuh |
Kumho Petro and Dongsuh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumho Petro and Dongsuh
The main advantage of trading using opposite Kumho Petro and Dongsuh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumho Petro position performs unexpectedly, Dongsuh 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 Dongsuh will offset losses from the drop in Dongsuh's long position.| Kumho Petro vs. Ssangyong Information Communication | Kumho Petro vs. Nice Information Telecommunication | Kumho Petro vs. Hanjin Transportation Co | Kumho Petro vs. Nam Hwa Construction |
| Dongsuh vs. Next Entertainment World | Dongsuh vs. Hanjoo Light Metal | Dongsuh vs. Pan Entertainment Co | Dongsuh vs. Youngsin Metal Industrial |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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