Correlation Between Kukdong Oil and Youngchang Chemical
Can any of the company-specific risk be diversified away by investing in both Kukdong Oil and Youngchang Chemical 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 Youngchang Chemical 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 Youngchang Chemical Co, you can compare the effects of market volatilities on Kukdong Oil and Youngchang Chemical 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 Youngchang Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdong Oil and Youngchang Chemical.
Diversification Opportunities for Kukdong Oil and Youngchang Chemical
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kukdong and Youngchang is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Kukdong Oil Chemicals and Youngchang Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youngchang Chemical 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 Youngchang Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Youngchang Chemical has no effect on the direction of Kukdong Oil i.e., Kukdong Oil and Youngchang Chemical go up and down completely randomly.
Pair Corralation between Kukdong Oil and Youngchang Chemical
Assuming the 90 days trading horizon Kukdong Oil Chemicals is expected to under-perform the Youngchang Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Kukdong Oil Chemicals is 2.93 times less risky than Youngchang Chemical. The stock trades about -0.02 of its potential returns per unit of risk. The Youngchang Chemical Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 960,371 in Youngchang Chemical Co on November 5, 2024 and sell it today you would earn a total of 1,154,629 from holding Youngchang Chemical Co or generate 120.23% 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. Youngchang Chemical Co
Performance |
| Timeline |
| Kukdong Oil Chemicals |
| Youngchang Chemical |
Kukdong Oil and Youngchang Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdong Oil and Youngchang Chemical
The main advantage of trading using opposite Kukdong Oil and Youngchang Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdong Oil position performs unexpectedly, Youngchang Chemical 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 Youngchang Chemical will offset losses from the drop in Youngchang Chemical's long position.| Kukdong Oil vs. AptaBio Therapeutics | Kukdong Oil vs. Daewoo SBI SPAC | Kukdong Oil vs. Dream Security co | Kukdong Oil vs. Microfriend |
| Youngchang Chemical vs. LG Chem | Youngchang Chemical vs. Chunbo Co | Youngchang Chemical vs. DukSan Neolux CoLtd | Youngchang Chemical vs. Hyosung Chemical Corp |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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