Correlation Between Kukdong Oil and Dream Security
Can any of the company-specific risk be diversified away by investing in both Kukdong Oil and Dream Security 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 Dream Security 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 Dream Security co, you can compare the effects of market volatilities on Kukdong Oil and Dream Security 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 Dream Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdong Oil and Dream Security.
Diversification Opportunities for Kukdong Oil and Dream Security
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kukdong and Dream is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Kukdong Oil Chemicals and Dream Security co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Security co 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 Dream Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Security co has no effect on the direction of Kukdong Oil i.e., Kukdong Oil and Dream Security go up and down completely randomly.
Pair Corralation between Kukdong Oil and Dream Security
Assuming the 90 days trading horizon Kukdong Oil Chemicals is expected to under-perform the Dream Security. But the stock apears to be less risky and, when comparing its historical volatility, Kukdong Oil Chemicals is 2.07 times less risky than Dream Security. The stock trades about -0.08 of its potential returns per unit of risk. The Dream Security co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 292,500 in Dream Security co on September 4, 2024 and sell it today you would earn a total of 40,000 from holding Dream Security co or generate 13.68% 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. Dream Security co
Performance |
| Timeline |
| Kukdong Oil Chemicals |
| Dream Security co |
Kukdong Oil and Dream Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdong Oil and Dream Security
The main advantage of trading using opposite Kukdong Oil and Dream Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdong Oil position performs unexpectedly, Dream Security 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 Dream Security will offset losses from the drop in Dream Security's long position.| Kukdong Oil vs. Daishin Information Communications | Kukdong Oil vs. GS Retail Co | Kukdong Oil vs. Korea Computer | Kukdong Oil vs. RF Materials Co |
| Dream Security vs. Kukil Metal Co | Dream Security vs. Kukdong Oil Chemicals | Dream Security vs. Youngsin Metal Industrial | Dream Security vs. LG Chemicals |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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