Correlation Between Kukdong Oil and Ilji Technology
Can any of the company-specific risk be diversified away by investing in both Kukdong Oil and Ilji Technology 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 Ilji Technology 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 Ilji Technology Co, you can compare the effects of market volatilities on Kukdong Oil and Ilji Technology 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 Ilji Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdong Oil and Ilji Technology.
Diversification Opportunities for Kukdong Oil and Ilji Technology
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kukdong and Ilji is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kukdong Oil Chemicals and Ilji Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ilji Technology 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 Ilji Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ilji Technology has no effect on the direction of Kukdong Oil i.e., Kukdong Oil and Ilji Technology go up and down completely randomly.
Pair Corralation between Kukdong Oil and Ilji Technology
Assuming the 90 days trading horizon Kukdong Oil is expected to generate 5.11 times less return on investment than Ilji Technology. But when comparing it to its historical volatility, Kukdong Oil Chemicals is 1.1 times less risky than Ilji Technology. It trades about 0.03 of its potential returns per unit of risk. Ilji Technology Co is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 367,587 in Ilji Technology Co on October 30, 2024 and sell it today you would earn a total of 42,413 from holding Ilji Technology Co or generate 11.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kukdong Oil Chemicals vs. Ilji Technology Co
Performance |
| Timeline |
| Kukdong Oil Chemicals |
| Ilji Technology |
Kukdong Oil and Ilji Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdong Oil and Ilji Technology
The main advantage of trading using opposite Kukdong Oil and Ilji Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdong Oil position performs unexpectedly, Ilji Technology 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 Ilji Technology will offset losses from the drop in Ilji Technology's long position.| Kukdong Oil vs. Dongkook Industrial Co | Kukdong Oil vs. Kumho Industrial Co | Kukdong Oil vs. KT Submarine Telecom | Kukdong Oil vs. Hwasung Industrial Co |
| Ilji Technology vs. Samhyun Steel Co | Ilji Technology vs. LEENO Industrial | Ilji Technology vs. Hyunwoo Industrial Co | Ilji Technology vs. Samick Musical Instruments |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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