Correlation Between Kumho Petro and Vissem Electronics
Can any of the company-specific risk be diversified away by investing in both Kumho Petro and Vissem Electronics 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 Vissem Electronics 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 Vissem Electronics Co, you can compare the effects of market volatilities on Kumho Petro and Vissem Electronics 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 Vissem Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumho Petro and Vissem Electronics.
Diversification Opportunities for Kumho Petro and Vissem Electronics
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kumho and Vissem is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kumho Petro Chemical and Vissem Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vissem Electronics 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 Vissem Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vissem Electronics has no effect on the direction of Kumho Petro i.e., Kumho Petro and Vissem Electronics go up and down completely randomly.
Pair Corralation between Kumho Petro and Vissem Electronics
Assuming the 90 days trading horizon Kumho Petro Chemical is expected to under-perform the Vissem Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Kumho Petro Chemical is 1.8 times less risky than Vissem Electronics. The stock trades about -0.04 of its potential returns per unit of risk. The Vissem Electronics Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 474,723 in Vissem Electronics Co on November 1, 2024 and sell it today you would lose (113,223) from holding Vissem Electronics Co or give up 23.85% 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. Vissem Electronics Co
Performance |
| Timeline |
| Kumho Petro Chemical |
| Vissem Electronics |
Kumho Petro and Vissem Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumho Petro and Vissem Electronics
The main advantage of trading using opposite Kumho Petro and Vissem Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumho Petro position performs unexpectedly, Vissem Electronics 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 Vissem Electronics will offset losses from the drop in Vissem Electronics' long position.| Kumho Petro vs. SK Chemicals Co | Kumho Petro vs. SK Chemicals Co | Kumho Petro vs. Chinyang Hold | Kumho Petro vs. Busan Industrial Co |
| Vissem Electronics vs. Stic Investments | Vissem Electronics vs. Worldex Industry Trading | Vissem Electronics vs. Atinum Investment Co | Vissem Electronics vs. Samyung Trading 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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