Correlation Between Kukdong Oil and Korea Alcohol
Can any of the company-specific risk be diversified away by investing in both Kukdong Oil and Korea Alcohol 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 Alcohol 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 Alcohol Industrial, you can compare the effects of market volatilities on Kukdong Oil and Korea Alcohol 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 Alcohol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdong Oil and Korea Alcohol.
Diversification Opportunities for Kukdong Oil and Korea Alcohol
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kukdong and Korea is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kukdong Oil Chemicals and Korea Alcohol Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Alcohol Industrial 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 Alcohol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Alcohol Industrial has no effect on the direction of Kukdong Oil i.e., Kukdong Oil and Korea Alcohol go up and down completely randomly.
Pair Corralation between Kukdong Oil and Korea Alcohol
Assuming the 90 days trading horizon Kukdong Oil Chemicals is expected to generate 1.52 times more return on investment than Korea Alcohol. However, Kukdong Oil is 1.52 times more volatile than Korea Alcohol Industrial. It trades about -0.02 of its potential returns per unit of risk. Korea Alcohol Industrial is currently generating about -0.09 per unit of risk. If you would invest 402,000 in Kukdong Oil Chemicals on September 3, 2024 and sell it today you would lose (44,000) from holding Kukdong Oil Chemicals or give up 10.95% 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. Korea Alcohol Industrial
Performance |
| Timeline |
| Kukdong Oil Chemicals |
| Korea Alcohol Industrial |
Kukdong Oil and Korea Alcohol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdong Oil and Korea Alcohol
The main advantage of trading using opposite Kukdong Oil and Korea Alcohol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdong Oil position performs unexpectedly, Korea Alcohol 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 Alcohol will offset losses from the drop in Korea Alcohol's long position.| Kukdong Oil vs. PJ Metal Co | Kukdong Oil vs. Homecast CoLtd | Kukdong Oil vs. Sungmoon Electronics Co | Kukdong Oil vs. LG Electronics |
| Korea Alcohol vs. KMH Hitech Co | Korea Alcohol vs. Songwon Industrial Co | Korea Alcohol vs. Cots Technology Co | Korea Alcohol vs. Korea Shipbuilding Offshore |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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