Correlation Between Kukdong Oil and POSCO M
Can any of the company-specific risk be diversified away by investing in both Kukdong Oil and POSCO M 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 M 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 M TECH Co, you can compare the effects of market volatilities on Kukdong Oil and POSCO M 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 M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdong Oil and POSCO M.
Diversification Opportunities for Kukdong Oil and POSCO M
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kukdong and POSCO is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Kukdong Oil Chemicals and POSCO M TECH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO M TECH 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 M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSCO M TECH has no effect on the direction of Kukdong Oil i.e., Kukdong Oil and POSCO M go up and down completely randomly.
Pair Corralation between Kukdong Oil and POSCO M
Assuming the 90 days trading horizon Kukdong Oil Chemicals is expected to generate 0.28 times more return on investment than POSCO M. However, Kukdong Oil Chemicals is 3.58 times less risky than POSCO M. It trades about -0.2 of its potential returns per unit of risk. POSCO M TECH Co is currently generating about -0.2 per unit of risk. If you would invest 375,000 in Kukdong Oil Chemicals on August 25, 2024 and sell it today you would lose (12,000) from holding Kukdong Oil Chemicals or give up 3.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kukdong Oil Chemicals vs. POSCO M TECH Co
Performance |
| Timeline |
| Kukdong Oil Chemicals |
| POSCO M TECH |
Kukdong Oil and POSCO M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdong Oil and POSCO M
The main advantage of trading using opposite Kukdong Oil and POSCO M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdong Oil position performs unexpectedly, POSCO M 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 M will offset losses from the drop in POSCO M's long position.| Kukdong Oil vs. Hana Materials | Kukdong Oil vs. Hanjin Transportation Co | Kukdong Oil vs. Hanmi Semiconductor Co | Kukdong Oil vs. LAKE MATERIALS LTD |
| POSCO M vs. LG Chemicals | POSCO M vs. POSCO Holdings | POSCO M vs. Lotte Chemical Corp | POSCO M vs. Hyundai Steel |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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