Correlation Between Kukdong Oil and Sungdo Engineering
Can any of the company-specific risk be diversified away by investing in both Kukdong Oil and Sungdo Engineering 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 Sungdo Engineering 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 Sungdo Engineering Construction, you can compare the effects of market volatilities on Kukdong Oil and Sungdo Engineering 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 Sungdo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdong Oil and Sungdo Engineering.
Diversification Opportunities for Kukdong Oil and Sungdo Engineering
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kukdong and Sungdo is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Kukdong Oil Chemicals and Sungdo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungdo Engineering 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 Sungdo Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungdo Engineering has no effect on the direction of Kukdong Oil i.e., Kukdong Oil and Sungdo Engineering go up and down completely randomly.
Pair Corralation between Kukdong Oil and Sungdo Engineering
Assuming the 90 days trading horizon Kukdong Oil Chemicals is expected to generate 0.21 times more return on investment than Sungdo Engineering. However, Kukdong Oil Chemicals is 4.68 times less risky than Sungdo Engineering. It trades about -0.43 of its potential returns per unit of risk. Sungdo Engineering Construction is currently generating about -0.74 per unit of risk. If you would invest 352,000 in Kukdong Oil Chemicals on November 7, 2024 and sell it today you would lose (9,000) from holding Kukdong Oil Chemicals or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kukdong Oil Chemicals vs. Sungdo Engineering Constructio
Performance |
| Timeline |
| Kukdong Oil Chemicals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Sungdo Engineering |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Kukdong Oil and Sungdo Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdong Oil and Sungdo Engineering
The main advantage of trading using opposite Kukdong Oil and Sungdo Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdong Oil position performs unexpectedly, Sungdo Engineering 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 Sungdo Engineering will offset losses from the drop in Sungdo Engineering's long position.| Kukdong Oil vs. FNSTech Co | Kukdong Oil vs. Cuckoo Electronics Co | Kukdong Oil vs. SEOWONINTECHCoLtd | Kukdong Oil vs. Polaris Office Corp |
| Sungdo Engineering vs. Koh Young Technology | Sungdo Engineering vs. Hana Financial | Sungdo Engineering vs. Samsung Securities |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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