Correlation Between Kukdong Oil and Posco Chemical
Can any of the company-specific risk be diversified away by investing in both Kukdong Oil and Posco Chemical 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 Posco Chemical 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 Posco Chemical Co, you can compare the effects of market volatilities on Kukdong Oil and Posco Chemical 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 Posco Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdong Oil and Posco Chemical.
Diversification Opportunities for Kukdong Oil and Posco Chemical
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kukdong and Posco is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Kukdong Oil Chemicals and Posco Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Posco Chemical 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 Posco Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Posco Chemical has no effect on the direction of Kukdong Oil i.e., Kukdong Oil and Posco Chemical go up and down completely randomly.
Pair Corralation between Kukdong Oil and Posco Chemical
Assuming the 90 days trading horizon Kukdong Oil is expected to generate 1.67 times less return on investment than Posco Chemical. But when comparing it to its historical volatility, Kukdong Oil Chemicals is 1.39 times less risky than Posco Chemical. It trades about 0.01 of its potential returns per unit of risk. Posco Chemical Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 18,854,900 in Posco Chemical Co on September 12, 2024 and sell it today you would lose (2,364,900) from holding Posco Chemical Co or give up 12.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kukdong Oil Chemicals vs. Posco Chemical Co
Performance |
| Timeline |
| Kukdong Oil Chemicals |
| Posco Chemical |
Kukdong Oil and Posco Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdong Oil and Posco Chemical
The main advantage of trading using opposite Kukdong Oil and Posco Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdong Oil position performs unexpectedly, Posco Chemical 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 Posco Chemical will offset losses from the drop in Posco Chemical's long position.| Kukdong Oil vs. Samsung Electronics Co | Kukdong Oil vs. Samsung Electronics Co | Kukdong Oil vs. SK Hynix | Kukdong Oil vs. POSCO Holdings |
| Posco Chemical vs. Kukdong Oil Chemicals | Posco Chemical vs. BGF Retail Co | Posco Chemical vs. Dongnam Chemical Co | Posco Chemical vs. Namhae Chemical |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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