Correlation Between Kukdong Oil and Hyundai Steel
Can any of the company-specific risk be diversified away by investing in both Kukdong Oil and Hyundai Steel 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 Hyundai Steel 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 Hyundai Steel, you can compare the effects of market volatilities on Kukdong Oil and Hyundai Steel 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 Hyundai Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdong Oil and Hyundai Steel.
Diversification Opportunities for Kukdong Oil and Hyundai Steel
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kukdong and Hyundai is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Kukdong Oil Chemicals and Hyundai Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Steel 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 Hyundai Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Steel has no effect on the direction of Kukdong Oil i.e., Kukdong Oil and Hyundai Steel go up and down completely randomly.
Pair Corralation between Kukdong Oil and Hyundai Steel
Assuming the 90 days trading horizon Kukdong Oil Chemicals is expected to generate 0.46 times more return on investment than Hyundai Steel. However, Kukdong Oil Chemicals is 2.17 times less risky than Hyundai Steel. It trades about -0.01 of its potential returns per unit of risk. Hyundai Steel is currently generating about -0.03 per unit of risk. If you would invest 349,446 in Kukdong Oil Chemicals on October 29, 2024 and sell it today you would lose (4,946) from holding Kukdong Oil Chemicals or give up 1.42% 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. Hyundai Steel
Performance |
| Timeline |
| Kukdong Oil Chemicals |
| Hyundai Steel |
Kukdong Oil and Hyundai Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdong Oil and Hyundai Steel
The main advantage of trading using opposite Kukdong Oil and Hyundai Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdong Oil position performs unexpectedly, Hyundai Steel 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 Hyundai Steel will offset losses from the drop in Hyundai Steel's long position.| Kukdong Oil vs. Sung Bo Chemicals | Kukdong Oil vs. Youngbo Chemical Co | Kukdong Oil vs. ABOV Semiconductor Co | Kukdong Oil vs. Hanmi Semiconductor Co |
| Hyundai Steel vs. Heungkuk Metaltech CoLtd | Hyundai Steel vs. Sangsin Energy Display | Hyundai Steel vs. Youngsin Metal Industrial | Hyundai Steel vs. BGF Retail 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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