Correlation Between Kukdong Oil and Duksan Hi
Can any of the company-specific risk be diversified away by investing in both Kukdong Oil and Duksan Hi 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 Duksan Hi 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 Duksan Hi Metal, you can compare the effects of market volatilities on Kukdong Oil and Duksan Hi 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 Duksan Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdong Oil and Duksan Hi.
Diversification Opportunities for Kukdong Oil and Duksan Hi
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kukdong and Duksan is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kukdong Oil Chemicals and Duksan Hi Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duksan Hi Metal 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 Duksan Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duksan Hi Metal has no effect on the direction of Kukdong Oil i.e., Kukdong Oil and Duksan Hi go up and down completely randomly.
Pair Corralation between Kukdong Oil and Duksan Hi
Assuming the 90 days trading horizon Kukdong Oil is expected to generate 1.91 times less return on investment than Duksan Hi. But when comparing it to its historical volatility, Kukdong Oil Chemicals is 2.73 times less risky than Duksan Hi. It trades about 0.17 of its potential returns per unit of risk. Duksan Hi Metal is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 387,500 in Duksan Hi Metal on October 15, 2024 and sell it today you would earn a total of 17,500 from holding Duksan Hi Metal or generate 4.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kukdong Oil Chemicals vs. Duksan Hi Metal
Performance |
| Timeline |
| Kukdong Oil Chemicals |
| Duksan Hi Metal |
Kukdong Oil and Duksan Hi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdong Oil and Duksan Hi
The main advantage of trading using opposite Kukdong Oil and Duksan Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdong Oil position performs unexpectedly, Duksan Hi 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 Duksan Hi will offset losses from the drop in Duksan Hi's long position.| Kukdong Oil vs. BGF Retail Co | Kukdong Oil vs. HB Technology TD | Kukdong Oil vs. Samick Musical Instruments | Kukdong Oil vs. Ssangyong Information Communication |
| Duksan Hi vs. Kukdong Oil Chemicals | Duksan Hi vs. Heungkuk Metaltech CoLtd | Duksan Hi vs. Daejung Chemicals Metals | Duksan Hi vs. Nice Information Telecommunication |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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