Correlation Between Kumho Petro and LB Investment
Can any of the company-specific risk be diversified away by investing in both Kumho Petro and LB Investment 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 LB Investment 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 LB Investment, you can compare the effects of market volatilities on Kumho Petro and LB Investment 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 LB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumho Petro and LB Investment.
Diversification Opportunities for Kumho Petro and LB Investment
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kumho and 309960 is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Kumho Petro Chemical and LB Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Investment 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 LB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Investment has no effect on the direction of Kumho Petro i.e., Kumho Petro and LB Investment go up and down completely randomly.
Pair Corralation between Kumho Petro and LB Investment
Assuming the 90 days trading horizon Kumho Petro Chemical is expected to under-perform the LB Investment. In addition to that, Kumho Petro is 3.61 times more volatile than LB Investment. It trades about -0.43 of its total potential returns per unit of risk. LB Investment is currently generating about -0.17 per unit of volatility. If you would invest 385,500 in LB Investment on September 2, 2024 and sell it today you would lose (13,500) from holding LB Investment or give up 3.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kumho Petro Chemical vs. LB Investment
Performance |
| Timeline |
| Kumho Petro Chemical |
| LB Investment |
Kumho Petro and LB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumho Petro and LB Investment
The main advantage of trading using opposite Kumho Petro and LB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumho Petro position performs unexpectedly, LB Investment 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 LB Investment will offset losses from the drop in LB Investment's long position.| Kumho Petro vs. Hankook Steel Co | Kumho Petro vs. Han Kook Steel | Kumho Petro vs. Hankuk Steel Wire | Kumho Petro vs. Ni Steel |
| LB Investment vs. Samsung Electronics Co | LB Investment vs. Samsung Electronics Co | LB Investment vs. LG Energy Solution | LB Investment vs. SK Hynix |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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