Correlation Between Kumho Petro and Aurora World
Can any of the company-specific risk be diversified away by investing in both Kumho Petro and Aurora World 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 Aurora World 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 Aurora World, you can compare the effects of market volatilities on Kumho Petro and Aurora World 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 Aurora World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumho Petro and Aurora World.
Diversification Opportunities for Kumho Petro and Aurora World
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kumho and Aurora is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kumho Petro Chemical and Aurora World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora World 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 Aurora World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora World has no effect on the direction of Kumho Petro i.e., Kumho Petro and Aurora World go up and down completely randomly.
Pair Corralation between Kumho Petro and Aurora World
Assuming the 90 days trading horizon Kumho Petro Chemical is expected to generate 1.16 times more return on investment than Aurora World. However, Kumho Petro is 1.16 times more volatile than Aurora World. It trades about -0.02 of its potential returns per unit of risk. Aurora World is currently generating about -0.03 per unit of risk. If you would invest 6,108,642 in Kumho Petro Chemical on September 12, 2024 and sell it today you would lose (938,642) from holding Kumho Petro Chemical or give up 15.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.71% |
| Values | Daily Returns |
Kumho Petro Chemical vs. Aurora World
Performance |
| Timeline |
| Kumho Petro Chemical |
| Aurora World |
Kumho Petro and Aurora World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumho Petro and Aurora World
The main advantage of trading using opposite Kumho Petro and Aurora World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumho Petro position performs unexpectedly, Aurora World 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 Aurora World will offset losses from the drop in Aurora World's long position.| Kumho Petro vs. Seoul Electronics Telecom | Kumho Petro vs. SK Chemicals Co | Kumho Petro vs. Kisan Telecom Co | Kumho Petro vs. BIT Computer Co |
| Aurora World vs. Ssangyong Information Communication | Aurora World vs. PJ Metal Co | Aurora World vs. CG Hi Tech | Aurora World vs. Korea Computer |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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