Correlation Between Kumho Petro and Dgb Financial
Can any of the company-specific risk be diversified away by investing in both Kumho Petro and Dgb Financial 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 Dgb Financial 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 Dgb Financial, you can compare the effects of market volatilities on Kumho Petro and Dgb Financial 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 Dgb Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumho Petro and Dgb Financial.
Diversification Opportunities for Kumho Petro and Dgb Financial
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kumho and Dgb is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kumho Petro Chemical and Dgb Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dgb Financial 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 Dgb Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dgb Financial has no effect on the direction of Kumho Petro i.e., Kumho Petro and Dgb Financial go up and down completely randomly.
Pair Corralation between Kumho Petro and Dgb Financial
Assuming the 90 days trading horizon Kumho Petro Chemical is expected to under-perform the Dgb Financial. In addition to that, Kumho Petro is 1.06 times more volatile than Dgb Financial. It trades about -0.06 of its total potential returns per unit of risk. Dgb Financial is currently generating about 0.05 per unit of volatility. If you would invest 678,115 in Dgb Financial on September 3, 2024 and sell it today you would earn a total of 208,885 from holding Dgb Financial or generate 30.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kumho Petro Chemical vs. Dgb Financial
Performance |
| Timeline |
| Kumho Petro Chemical |
| Dgb Financial |
Kumho Petro and Dgb Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumho Petro and Dgb Financial
The main advantage of trading using opposite Kumho Petro and Dgb Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumho Petro position performs unexpectedly, Dgb Financial 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 Dgb Financial will offset losses from the drop in Dgb Financial's long position.The idea behind Kumho Petro Chemical and Dgb Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Dgb Financial vs. Taegu Broadcasting | Dgb Financial vs. LG Display Co | Dgb Financial vs. Dongbang Transport Logistics | Dgb Financial vs. Display Tech 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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