Correlation Between SBI Investment and Kukdong Oil
Can any of the company-specific risk be diversified away by investing in both SBI Investment and Kukdong Oil 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 SBI Investment and Kukdong Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBI Investment KOREA and Kukdong Oil Chemicals, you can compare the effects of market volatilities on SBI Investment and Kukdong Oil 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 SBI Investment with a short position of Kukdong Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Investment and Kukdong Oil.
Diversification Opportunities for SBI Investment and Kukdong Oil
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SBI and Kukdong is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding SBI Investment KOREA and Kukdong Oil Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukdong Oil Chemicals and SBI Investment 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 SBI Investment KOREA are associated (or correlated) with Kukdong Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukdong Oil Chemicals has no effect on the direction of SBI Investment i.e., SBI Investment and Kukdong Oil go up and down completely randomly.
Pair Corralation between SBI Investment and Kukdong Oil
Assuming the 90 days trading horizon SBI Investment KOREA is expected to under-perform the Kukdong Oil. In addition to that, SBI Investment is 2.78 times more volatile than Kukdong Oil Chemicals. It trades about -0.06 of its total potential returns per unit of risk. Kukdong Oil Chemicals is currently generating about 0.12 per unit of volatility. If you would invest 343,000 in Kukdong Oil Chemicals on November 28, 2024 and sell it today you would earn a total of 4,000 from holding Kukdong Oil Chemicals or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
SBI Investment KOREA vs. Kukdong Oil Chemicals
Performance |
| Timeline |
| SBI Investment KOREA |
| Kukdong Oil Chemicals |
SBI Investment and Kukdong Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Investment and Kukdong Oil
The main advantage of trading using opposite SBI Investment and Kukdong Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Investment position performs unexpectedly, Kukdong Oil 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 Kukdong Oil will offset losses from the drop in Kukdong Oil's long position.| SBI Investment vs. Daehan Steel | SBI Investment vs. Husteel | SBI Investment vs. Insun Environment New | SBI Investment vs. Ssangyong Information Communication |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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