Correlation Between Kukdong Oil and Korea Steel
Can any of the company-specific risk be diversified away by investing in both Kukdong Oil and Korea 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 Korea 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 Korea Steel Co, you can compare the effects of market volatilities on Kukdong Oil and Korea 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 Korea Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdong Oil and Korea Steel.
Diversification Opportunities for Kukdong Oil and Korea Steel
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Kukdong and Korea is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Kukdong Oil Chemicals and Korea Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea 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 Korea Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Steel has no effect on the direction of Kukdong Oil i.e., Kukdong Oil and Korea Steel go up and down completely randomly.
Pair Corralation between Kukdong Oil and Korea Steel
Assuming the 90 days trading horizon Kukdong Oil Chemicals is expected to generate 0.43 times more return on investment than Korea Steel. However, Kukdong Oil Chemicals is 2.31 times less risky than Korea Steel. It trades about -0.17 of its potential returns per unit of risk. Korea Steel Co is currently generating about -0.16 per unit of risk. If you would invest 373,500 in Kukdong Oil Chemicals on August 26, 2024 and sell it today you would lose (10,500) from holding Kukdong Oil Chemicals or give up 2.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kukdong Oil Chemicals vs. Korea Steel Co
Performance |
| Timeline |
| Kukdong Oil Chemicals |
| Korea Steel |
Kukdong Oil and Korea Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdong Oil and Korea Steel
The main advantage of trading using opposite Kukdong Oil and Korea Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdong Oil position performs unexpectedly, Korea 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 Korea Steel will offset losses from the drop in Korea Steel's long position.| Kukdong Oil vs. HB Technology TD | Kukdong Oil vs. Jeju Semiconductor Corp | Kukdong Oil vs. Shinhan Financial Group | Kukdong Oil vs. Guyoung Technology 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |