Correlation Between Korean Drug and SK Chemicals
Can any of the company-specific risk be diversified away by investing in both Korean Drug and SK Chemicals 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 Korean Drug and SK Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korean Drug Co and SK Chemicals Co, you can compare the effects of market volatilities on Korean Drug and SK Chemicals 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 Korean Drug with a short position of SK Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Drug and SK Chemicals.
Diversification Opportunities for Korean Drug and SK Chemicals
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Korean and 285130 is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Korean Drug Co and SK Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Chemicals and Korean Drug 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 Korean Drug Co are associated (or correlated) with SK Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Chemicals has no effect on the direction of Korean Drug i.e., Korean Drug and SK Chemicals go up and down completely randomly.
Pair Corralation between Korean Drug and SK Chemicals
Assuming the 90 days trading horizon Korean Drug Co is expected to generate 0.96 times more return on investment than SK Chemicals. However, Korean Drug Co is 1.04 times less risky than SK Chemicals. It trades about -0.06 of its potential returns per unit of risk. SK Chemicals Co is currently generating about -0.06 per unit of risk. If you would invest 806,121 in Korean Drug Co on September 3, 2024 and sell it today you would lose (350,121) from holding Korean Drug Co or give up 43.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Drug Co vs. SK Chemicals Co
Performance |
| Timeline |
| Korean Drug |
| SK Chemicals |
Korean Drug and SK Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Drug and SK Chemicals
The main advantage of trading using opposite Korean Drug and SK Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Drug position performs unexpectedly, SK Chemicals 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 SK Chemicals will offset losses from the drop in SK Chemicals' long position.| Korean Drug vs. Kolon Life Science | Korean Drug vs. JETEMA Co | Korean Drug vs. Aminologics CoLtd | Korean Drug vs. Daihan Pharmaceutical CoLtd |
| SK Chemicals vs. LG Chemicals | SK Chemicals vs. POSCO Holdings | SK Chemicals vs. Hanwha Solutions | SK Chemicals vs. Lotte Chemical Corp |
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 .
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |