Correlation Between Kukdong Oil and Lotte Fine
Can any of the company-specific risk be diversified away by investing in both Kukdong Oil and Lotte Fine 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 Lotte Fine 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 Lotte Fine Chemical, you can compare the effects of market volatilities on Kukdong Oil and Lotte Fine 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 Lotte Fine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdong Oil and Lotte Fine.
Diversification Opportunities for Kukdong Oil and Lotte Fine
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kukdong and Lotte is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kukdong Oil Chemicals and Lotte Fine Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Fine 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 Lotte Fine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Fine Chemical has no effect on the direction of Kukdong Oil i.e., Kukdong Oil and Lotte Fine go up and down completely randomly.
Pair Corralation between Kukdong Oil and Lotte Fine
Assuming the 90 days trading horizon Kukdong Oil Chemicals is expected to generate 0.32 times more return on investment than Lotte Fine. However, Kukdong Oil Chemicals is 3.09 times less risky than Lotte Fine. It trades about -0.14 of its potential returns per unit of risk. Lotte Fine Chemical is currently generating about -0.52 per unit of risk. If you would invest 371,000 in Kukdong Oil Chemicals on August 28, 2024 and sell it today you would lose (8,500) from holding Kukdong Oil Chemicals or give up 2.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kukdong Oil Chemicals vs. Lotte Fine Chemical
Performance |
| Timeline |
| Kukdong Oil Chemicals |
| Lotte Fine Chemical |
Kukdong Oil and Lotte Fine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdong Oil and Lotte Fine
The main advantage of trading using opposite Kukdong Oil and Lotte Fine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdong Oil position performs unexpectedly, Lotte Fine 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 Lotte Fine will offset losses from the drop in Lotte Fine's long position.| Kukdong Oil vs. AptaBio Therapeutics | Kukdong Oil vs. Daewoo SBI SPAC | Kukdong Oil vs. Dream Security co | Kukdong Oil vs. Microfriend |
| Lotte Fine vs. LG Chemicals | Lotte Fine vs. Lotte Chemical Corp | Lotte Fine vs. Hyundai Steel | Lotte Fine vs. Seah Steel Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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