Correlation Between Kukdong Oil and Hwasung Industrial
Can any of the company-specific risk be diversified away by investing in both Kukdong Oil and Hwasung Industrial 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 Hwasung Industrial 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 Hwasung Industrial Co, you can compare the effects of market volatilities on Kukdong Oil and Hwasung Industrial 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 Hwasung Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdong Oil and Hwasung Industrial.
Diversification Opportunities for Kukdong Oil and Hwasung Industrial
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Kukdong and Hwasung is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Kukdong Oil Chemicals and Hwasung Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwasung Industrial 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 Hwasung Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwasung Industrial has no effect on the direction of Kukdong Oil i.e., Kukdong Oil and Hwasung Industrial go up and down completely randomly.
Pair Corralation between Kukdong Oil and Hwasung Industrial
Assuming the 90 days trading horizon Kukdong Oil Chemicals is expected to under-perform the Hwasung Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Kukdong Oil Chemicals is 1.27 times less risky than Hwasung Industrial. The stock trades about -0.01 of its potential returns per unit of risk. The Hwasung Industrial Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 827,494 in Hwasung Industrial Co on October 18, 2024 and sell it today you would earn a total of 138,506 from holding Hwasung Industrial Co or generate 16.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kukdong Oil Chemicals vs. Hwasung Industrial Co
Performance |
| Timeline |
| Kukdong Oil Chemicals |
| Hwasung Industrial |
Kukdong Oil and Hwasung Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdong Oil and Hwasung Industrial
The main advantage of trading using opposite Kukdong Oil and Hwasung Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdong Oil position performs unexpectedly, Hwasung Industrial 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 Hwasung Industrial will offset losses from the drop in Hwasung Industrial's long position.| Kukdong Oil vs. Husteel | Kukdong Oil vs. LG Household Healthcare | Kukdong Oil vs. LG Household Healthcare | Kukdong Oil vs. DRB Industrial Co |
| Hwasung Industrial vs. Kukdong Oil Chemicals | Hwasung Industrial vs. Hanil Chemical Ind | Hwasung Industrial vs. Youl Chon Chemical | Hwasung Industrial vs. Wonbang 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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