Correlation Between Kukdong Oil and Echomarketing CoLtd
Can any of the company-specific risk be diversified away by investing in both Kukdong Oil and Echomarketing CoLtd 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 Echomarketing CoLtd 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 Echomarketing CoLtd, you can compare the effects of market volatilities on Kukdong Oil and Echomarketing CoLtd 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 Echomarketing CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdong Oil and Echomarketing CoLtd.
Diversification Opportunities for Kukdong Oil and Echomarketing CoLtd
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kukdong and Echomarketing is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Kukdong Oil Chemicals and Echomarketing CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Echomarketing CoLtd 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 Echomarketing CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Echomarketing CoLtd has no effect on the direction of Kukdong Oil i.e., Kukdong Oil and Echomarketing CoLtd go up and down completely randomly.
Pair Corralation between Kukdong Oil and Echomarketing CoLtd
Assuming the 90 days trading horizon Kukdong Oil Chemicals is expected to generate 0.58 times more return on investment than Echomarketing CoLtd. However, Kukdong Oil Chemicals is 1.73 times less risky than Echomarketing CoLtd. It trades about -0.02 of its potential returns per unit of risk. Echomarketing CoLtd is currently generating about -0.23 per unit of risk. If you would invest 343,000 in Kukdong Oil Chemicals on December 1, 2024 and sell it today you would lose (1,500) from holding Kukdong Oil Chemicals or give up 0.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kukdong Oil Chemicals vs. Echomarketing CoLtd
Performance |
| Timeline |
| Kukdong Oil Chemicals |
| Echomarketing CoLtd |
Kukdong Oil and Echomarketing CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdong Oil and Echomarketing CoLtd
The main advantage of trading using opposite Kukdong Oil and Echomarketing CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdong Oil position performs unexpectedly, Echomarketing CoLtd 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 Echomarketing CoLtd will offset losses from the drop in Echomarketing CoLtd's long position.| Kukdong Oil vs. EBEST Investment Securities | Kukdong Oil vs. KTB Investment Securities | Kukdong Oil vs. National Plastic Co | Kukdong Oil vs. E Investment Development |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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