Correlation Between SKC and Kumho Petro
Can any of the company-specific risk be diversified away by investing in both SKC and Kumho Petro 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 SKC and Kumho Petro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SKC Co and Kumho Petro Chemical, you can compare the effects of market volatilities on SKC and Kumho Petro 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 SKC with a short position of Kumho Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of SKC and Kumho Petro.
Diversification Opportunities for SKC and Kumho Petro
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SKC and Kumho is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding SKC Co and Kumho Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho Petro Chemical and SKC 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 SKC Co are associated (or correlated) with Kumho Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Petro Chemical has no effect on the direction of SKC i.e., SKC and Kumho Petro go up and down completely randomly.
Pair Corralation between SKC and Kumho Petro
Assuming the 90 days trading horizon SKC Co is expected to generate 2.39 times more return on investment than Kumho Petro. However, SKC is 2.39 times more volatile than Kumho Petro Chemical. It trades about 0.01 of its potential returns per unit of risk. Kumho Petro Chemical is currently generating about -0.03 per unit of risk. If you would invest 10,820,000 in SKC Co on August 31, 2024 and sell it today you would lose (930,000) from holding SKC Co or give up 8.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SKC Co vs. Kumho Petro Chemical
Performance |
| Timeline |
| SKC Co |
| Kumho Petro Chemical |
SKC and Kumho Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SKC and Kumho Petro
The main advantage of trading using opposite SKC and Kumho Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SKC position performs unexpectedly, Kumho Petro 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 Kumho Petro will offset losses from the drop in Kumho Petro's long position.| SKC vs. BIT Computer Co | SKC vs. Ssangyong Information Communication | SKC vs. DataSolution | SKC vs. CU Medical Systems |
| Kumho Petro vs. Kumho Petro Chemical | Kumho Petro vs. SKC Co | Kumho Petro vs. SK Chemicals Co | Kumho Petro vs. SK Chemicals 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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