Correlation Between Kumho Petro and Hankook Furniture
Can any of the company-specific risk be diversified away by investing in both Kumho Petro and Hankook Furniture 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 Hankook Furniture 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 Hankook Furniture Co, you can compare the effects of market volatilities on Kumho Petro and Hankook Furniture 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 Hankook Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumho Petro and Hankook Furniture.
Diversification Opportunities for Kumho Petro and Hankook Furniture
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kumho and Hankook is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Kumho Petro Chemical and Hankook Furniture Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankook Furniture 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 Hankook Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankook Furniture has no effect on the direction of Kumho Petro i.e., Kumho Petro and Hankook Furniture go up and down completely randomly.
Pair Corralation between Kumho Petro and Hankook Furniture
Assuming the 90 days trading horizon Kumho Petro Chemical is expected to under-perform the Hankook Furniture. In addition to that, Kumho Petro is 1.33 times more volatile than Hankook Furniture Co. It trades about -0.27 of its total potential returns per unit of risk. Hankook Furniture Co is currently generating about 0.13 per unit of volatility. If you would invest 406,500 in Hankook Furniture Co on September 18, 2024 and sell it today you would earn a total of 17,500 from holding Hankook Furniture Co or generate 4.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kumho Petro Chemical vs. Hankook Furniture Co
Performance |
| Timeline |
| Kumho Petro Chemical |
| Hankook Furniture |
Kumho Petro and Hankook Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumho Petro and Hankook Furniture
The main advantage of trading using opposite Kumho Petro and Hankook Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumho Petro position performs unexpectedly, Hankook Furniture 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 Hankook Furniture will offset losses from the drop in Hankook Furniture's long position.| Kumho Petro vs. SK Chemicals Co | Kumho Petro vs. SK Chemicals Co | Kumho Petro vs. Solution Advanced Technology | Kumho Petro vs. Busan Industrial Co |
| Hankook Furniture vs. Samyang Foods Co | Hankook Furniture vs. Sungmoon Electronics Co | Hankook Furniture vs. Samsung Electronics Co | Hankook Furniture vs. Cuckoo Electronics Co |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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