Correlation Between Kukdong Oil and Tongyang
Can any of the company-specific risk be diversified away by investing in both Kukdong Oil and Tongyang 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 Kukdong Oil and Tongyang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kukdong Oil Chemicals and Tongyang, you can compare the effects of market volatilities on Kukdong Oil and Tongyang 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 Kukdong Oil with a short position of Tongyang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdong Oil and Tongyang.
Diversification Opportunities for Kukdong Oil and Tongyang
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Kukdong and Tongyang is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Kukdong Oil Chemicals and Tongyang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tongyang and Kukdong Oil 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 Kukdong Oil Chemicals are associated (or correlated) with Tongyang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tongyang has no effect on the direction of Kukdong Oil i.e., Kukdong Oil and Tongyang go up and down completely randomly.
Pair Corralation between Kukdong Oil and Tongyang
Assuming the 90 days trading horizon Kukdong Oil Chemicals is expected to generate 0.14 times more return on investment than Tongyang. However, Kukdong Oil Chemicals is 7.28 times less risky than Tongyang. It trades about -0.13 of its potential returns per unit of risk. Tongyang is currently generating about -0.02 per unit of risk. If you would invest 369,500 in Kukdong Oil Chemicals on August 30, 2024 and sell it today you would lose (8,000) from holding Kukdong Oil Chemicals or give up 2.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Kukdong Oil Chemicals vs. Tongyang
Performance |
| Timeline |
| Kukdong Oil Chemicals |
| Tongyang |
Kukdong Oil and Tongyang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdong Oil and Tongyang
The main advantage of trading using opposite Kukdong Oil and Tongyang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdong Oil position performs unexpectedly, Tongyang 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 Tongyang will offset losses from the drop in Tongyang's long position.| Kukdong Oil vs. AptaBio Therapeutics | Kukdong Oil vs. Daewoo SBI SPAC | Kukdong Oil vs. Dream Security co | Kukdong Oil vs. Microfriend |
| Tongyang vs. LG Household Healthcare | Tongyang vs. SK Chemicals Co | Tongyang vs. InnoTherapy | Tongyang vs. Digital Multimedia Technology |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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