Correlation Between Kumho Petro and Settlebank
Can any of the company-specific risk be diversified away by investing in both Kumho Petro and Settlebank 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 Settlebank 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 Settlebank, you can compare the effects of market volatilities on Kumho Petro and Settlebank 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 Settlebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumho Petro and Settlebank.
Diversification Opportunities for Kumho Petro and Settlebank
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kumho and Settlebank is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Kumho Petro Chemical and Settlebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Settlebank 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 Settlebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Settlebank has no effect on the direction of Kumho Petro i.e., Kumho Petro and Settlebank go up and down completely randomly.
Pair Corralation between Kumho Petro and Settlebank
Assuming the 90 days trading horizon Kumho Petro Chemical is expected to under-perform the Settlebank. But the stock apears to be less risky and, when comparing its historical volatility, Kumho Petro Chemical is 1.28 times less risky than Settlebank. The stock trades about -0.09 of its potential returns per unit of risk. The Settlebank is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,671,000 in Settlebank on October 17, 2024 and sell it today you would lose (236,000) from holding Settlebank or give up 14.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kumho Petro Chemical vs. Settlebank
Performance |
| Timeline |
| Kumho Petro Chemical |
| Settlebank |
Kumho Petro and Settlebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumho Petro and Settlebank
The main advantage of trading using opposite Kumho Petro and Settlebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumho Petro position performs unexpectedly, Settlebank 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 Settlebank will offset losses from the drop in Settlebank's long position.| Kumho Petro vs. System and Application | Kumho Petro vs. KakaoBank Corp | Kumho Petro vs. Settlebank | Kumho Petro vs. Lotte Data Communication |
| Settlebank vs. Choil Aluminum | Settlebank vs. Heungkuk Metaltech CoLtd | Settlebank vs. Daiyang Metal Co | Settlebank vs. Korea Shipbuilding Offshore |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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