Correlation Between Kukdong Oil and Jeju Beer
Can any of the company-specific risk be diversified away by investing in both Kukdong Oil and Jeju Beer 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 Jeju Beer 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 Jeju Beer Co, you can compare the effects of market volatilities on Kukdong Oil and Jeju Beer 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 Jeju Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdong Oil and Jeju Beer.
Diversification Opportunities for Kukdong Oil and Jeju Beer
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kukdong and Jeju is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kukdong Oil Chemicals and Jeju Beer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Beer 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 Jeju Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Beer has no effect on the direction of Kukdong Oil i.e., Kukdong Oil and Jeju Beer go up and down completely randomly.
Pair Corralation between Kukdong Oil and Jeju Beer
Assuming the 90 days trading horizon Kukdong Oil Chemicals is expected to generate 0.38 times more return on investment than Jeju Beer. However, Kukdong Oil Chemicals is 2.63 times less risky than Jeju Beer. It trades about 0.21 of its potential returns per unit of risk. Jeju Beer Co is currently generating about -0.13 per unit of risk. If you would invest 333,368 in Kukdong Oil Chemicals on October 12, 2024 and sell it today you would earn a total of 16,632 from holding Kukdong Oil Chemicals or generate 4.99% 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. Jeju Beer Co
Performance |
| Timeline |
| Kukdong Oil Chemicals |
| Jeju Beer |
Kukdong Oil and Jeju Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kukdong Oil and Jeju Beer
The main advantage of trading using opposite Kukdong Oil and Jeju Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdong Oil position performs unexpectedly, Jeju Beer 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 Jeju Beer will offset losses from the drop in Jeju Beer's long position.| Kukdong Oil vs. Youl Chon Chemical | Kukdong Oil vs. Grand Korea Leisure | Kukdong Oil vs. LG Display Co | Kukdong Oil vs. Namhae Chemical |
| Jeju Beer vs. Kukdong Oil Chemicals | Jeju Beer vs. Daesung Industrial Co | Jeju Beer vs. Cheryong Industrial CoLtd | Jeju Beer vs. Hyunwoo Industrial Co |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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