Correlation Between Korea Alcohol and Kumho Industrial
Can any of the company-specific risk be diversified away by investing in both Korea Alcohol and Kumho Industrial 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 Korea Alcohol and Kumho Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Alcohol Industrial and Kumho Industrial Co, you can compare the effects of market volatilities on Korea Alcohol and Kumho Industrial 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 Korea Alcohol with a short position of Kumho Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Alcohol and Kumho Industrial.
Diversification Opportunities for Korea Alcohol and Kumho Industrial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Korea and Kumho is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Korea Alcohol Industrial and Kumho Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho Industrial and Korea Alcohol 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 Korea Alcohol Industrial are associated (or correlated) with Kumho Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Industrial has no effect on the direction of Korea Alcohol i.e., Korea Alcohol and Kumho Industrial go up and down completely randomly.
Pair Corralation between Korea Alcohol and Kumho Industrial
Assuming the 90 days trading horizon Korea Alcohol Industrial is expected to generate 1.08 times more return on investment than Kumho Industrial. However, Korea Alcohol is 1.08 times more volatile than Kumho Industrial Co. It trades about 0.0 of its potential returns per unit of risk. Kumho Industrial Co is currently generating about -0.08 per unit of risk. If you would invest 1,035,341 in Korea Alcohol Industrial on August 30, 2024 and sell it today you would lose (167,341) from holding Korea Alcohol Industrial or give up 16.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Alcohol Industrial vs. Kumho Industrial Co
Performance |
| Timeline |
| Korea Alcohol Industrial |
| Kumho Industrial |
Korea Alcohol and Kumho Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Alcohol and Kumho Industrial
The main advantage of trading using opposite Korea Alcohol and Kumho Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Alcohol position performs unexpectedly, Kumho Industrial 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 Kumho Industrial will offset losses from the drop in Kumho Industrial's long position.| Korea Alcohol vs. Hanil Iron Steel | Korea Alcohol vs. Lotte Non Life Insurance | Korea Alcohol vs. TOPMATERIAL LTD | Korea Alcohol vs. Dongbu Steel Co |
| Kumho Industrial vs. AptaBio Therapeutics | Kumho Industrial vs. Daewoo SBI SPAC | Kumho Industrial vs. Dream Security co | Kumho Industrial vs. Microfriend |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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