Correlation Between Kukdong Oil and Kukdo Chemical
Can any of the company-specific risk be diversified away by investing in both Kukdong Oil and Kukdo 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 Kukdo 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 Kukdo Chemical Co, you can compare the effects of market volatilities on Kukdong Oil and Kukdo 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 Kukdo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdong Oil and Kukdo Chemical.
Diversification Opportunities for Kukdong Oil and Kukdo Chemical
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kukdong and Kukdo is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Kukdong Oil Chemicals and Kukdo Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukdo 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 Kukdo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukdo Chemical has no effect on the direction of Kukdong Oil i.e., Kukdong Oil and Kukdo Chemical go up and down completely randomly.
Pair Corralation between Kukdong Oil and Kukdo Chemical
Assuming the 90 days trading horizon Kukdong Oil Chemicals is expected to generate 1.38 times more return on investment than Kukdo Chemical. However, Kukdong Oil is 1.38 times more volatile than Kukdo Chemical Co. It trades about 0.02 of its potential returns per unit of risk. Kukdo Chemical Co is currently generating about -0.01 per unit of risk. If you would invest 323,438 in Kukdong Oil Chemicals on November 27, 2024 and sell it today you would earn a total of 25,562 from holding Kukdong Oil Chemicals or generate 7.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kukdong Oil Chemicals vs. Kukdo Chemical Co
Performance |
| Timeline |
| Kukdong Oil Chemicals |
| Kukdo Chemical |
Kukdong Oil and Kukdo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdong Oil and Kukdo Chemical
The main advantage of trading using opposite Kukdong Oil and Kukdo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdong Oil position performs unexpectedly, Kukdo 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 Kukdo Chemical will offset losses from the drop in Kukdo Chemical's long position.| Kukdong Oil vs. Sangsangin Investment Securities | Kukdong Oil vs. Ssangyong Materials Corp | Kukdong Oil vs. Golden Bridge Investment | Kukdong Oil vs. EBEST Investment Securities |
| Kukdo Chemical vs. Seoul Electronics Telecom | Kukdo Chemical vs. Hotel Shilla Co | Kukdo Chemical vs. Korean Air Lines | Kukdo 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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