Correlation Between Kukdong Oil and CG Hi
Can any of the company-specific risk be diversified away by investing in both Kukdong Oil and CG Hi 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 CG Hi 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 CG Hi Tech, you can compare the effects of market volatilities on Kukdong Oil and CG Hi 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 CG Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdong Oil and CG Hi.
Diversification Opportunities for Kukdong Oil and CG Hi
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kukdong and 264660 is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Kukdong Oil Chemicals and CG Hi Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CG Hi Tech 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 CG Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CG Hi Tech has no effect on the direction of Kukdong Oil i.e., Kukdong Oil and CG Hi go up and down completely randomly.
Pair Corralation between Kukdong Oil and CG Hi
Assuming the 90 days trading horizon Kukdong Oil Chemicals is expected to generate 1.33 times more return on investment than CG Hi. However, Kukdong Oil is 1.33 times more volatile than CG Hi Tech. It trades about 0.01 of its potential returns per unit of risk. CG Hi Tech is currently generating about 0.0 per unit of risk. If you would invest 354,895 in Kukdong Oil Chemicals on September 3, 2024 and sell it today you would earn a total of 3,105 from holding Kukdong Oil Chemicals or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kukdong Oil Chemicals vs. CG Hi Tech
Performance |
| Timeline |
| Kukdong Oil Chemicals |
| CG Hi Tech |
Kukdong Oil and CG Hi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdong Oil and CG Hi
The main advantage of trading using opposite Kukdong Oil and CG Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdong Oil position performs unexpectedly, CG Hi 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 CG Hi will offset losses from the drop in CG Hi's long position.| Kukdong Oil vs. PJ Metal Co | Kukdong Oil vs. Homecast CoLtd | Kukdong Oil vs. Sungmoon Electronics Co | Kukdong Oil vs. LG Electronics |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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