Correlation Between Kukdong Oil and Daehan Steel
Can any of the company-specific risk be diversified away by investing in both Kukdong Oil and Daehan Steel 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 Daehan Steel 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 Daehan Steel, you can compare the effects of market volatilities on Kukdong Oil and Daehan Steel 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 Daehan Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdong Oil and Daehan Steel.
Diversification Opportunities for Kukdong Oil and Daehan Steel
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kukdong and Daehan is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Kukdong Oil Chemicals and Daehan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daehan Steel 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 Daehan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daehan Steel has no effect on the direction of Kukdong Oil i.e., Kukdong Oil and Daehan Steel go up and down completely randomly.
Pair Corralation between Kukdong Oil and Daehan Steel
Assuming the 90 days trading horizon Kukdong Oil Chemicals is expected to under-perform the Daehan Steel. But the stock apears to be less risky and, when comparing its historical volatility, Kukdong Oil Chemicals is 3.72 times less risky than Daehan Steel. The stock trades about -0.14 of its potential returns per unit of risk. The Daehan Steel is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,306,000 in Daehan Steel on August 29, 2024 and sell it today you would earn a total of 221,000 from holding Daehan Steel or generate 16.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kukdong Oil Chemicals vs. Daehan Steel
Performance |
| Timeline |
| Kukdong Oil Chemicals |
| Daehan Steel |
Kukdong Oil and Daehan Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdong Oil and Daehan Steel
The main advantage of trading using opposite Kukdong Oil and Daehan Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdong Oil position performs unexpectedly, Daehan Steel 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 Daehan Steel will offset losses from the drop in Daehan Steel's long position.| Kukdong Oil vs. AptaBio Therapeutics | Kukdong Oil vs. Daewoo SBI SPAC | Kukdong Oil vs. Dream Security co | Kukdong Oil vs. Microfriend |
| Daehan Steel vs. Cots Technology Co | Daehan Steel vs. Ssangyong Information Communication | Daehan Steel vs. Daesung Hi Tech Co | Daehan Steel vs. BIT Computer Co |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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