Correlation Between Kukdong Oil and Miwon Chemical
Can any of the company-specific risk be diversified away by investing in both Kukdong Oil and Miwon 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 Miwon 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 Miwon Chemical, you can compare the effects of market volatilities on Kukdong Oil and Miwon 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 Miwon Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdong Oil and Miwon Chemical.
Diversification Opportunities for Kukdong Oil and Miwon Chemical
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Kukdong and Miwon is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kukdong Oil Chemicals and Miwon Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miwon 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 Miwon Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miwon Chemical has no effect on the direction of Kukdong Oil i.e., Kukdong Oil and Miwon Chemical go up and down completely randomly.
Pair Corralation between Kukdong Oil and Miwon Chemical
Assuming the 90 days trading horizon Kukdong Oil Chemicals is expected to generate 1.01 times more return on investment than Miwon Chemical. However, Kukdong Oil is 1.01 times more volatile than Miwon Chemical. It trades about -0.2 of its potential returns per unit of risk. Miwon Chemical is currently generating about -0.23 per unit of risk. If you would invest 375,000 in Kukdong Oil Chemicals on August 25, 2024 and sell it today you would lose (12,000) from holding Kukdong Oil Chemicals or give up 3.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kukdong Oil Chemicals vs. Miwon Chemical
Performance |
| Timeline |
| Kukdong Oil Chemicals |
| Miwon Chemical |
Kukdong Oil and Miwon Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdong Oil and Miwon Chemical
The main advantage of trading using opposite Kukdong Oil and Miwon Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdong Oil position performs unexpectedly, Miwon 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 Miwon Chemical will offset losses from the drop in Miwon 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 |
| Miwon Chemical vs. LG Chem | Miwon Chemical vs. Chunbo Co | Miwon Chemical vs. Hyosung Chemical Corp | Miwon Chemical vs. LIG ES SPAC |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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