Correlation Between SK Holdings and KCC Engineering
Can any of the company-specific risk be diversified away by investing in both SK Holdings and KCC Engineering 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 SK Holdings and KCC Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Holdings Co and KCC Engineering Construction, you can compare the effects of market volatilities on SK Holdings and KCC Engineering 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 SK Holdings with a short position of KCC Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Holdings and KCC Engineering.
Diversification Opportunities for SK Holdings and KCC Engineering
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 034730 and KCC is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding SK Holdings Co and KCC Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCC Engineering Cons and SK Holdings 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 SK Holdings Co are associated (or correlated) with KCC Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KCC Engineering Cons has no effect on the direction of SK Holdings i.e., SK Holdings and KCC Engineering go up and down completely randomly.
Pair Corralation between SK Holdings and KCC Engineering
Assuming the 90 days trading horizon SK Holdings Co is expected to generate 2.3 times more return on investment than KCC Engineering. However, SK Holdings is 2.3 times more volatile than KCC Engineering Construction. It trades about 0.18 of its potential returns per unit of risk. KCC Engineering Construction is currently generating about -0.09 per unit of risk. If you would invest 13,680,000 in SK Holdings Co on October 20, 2024 and sell it today you would earn a total of 1,000,000 from holding SK Holdings Co or generate 7.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Holdings Co vs. KCC Engineering Construction
Performance |
| Timeline |
| SK Holdings |
| KCC Engineering Cons |
SK Holdings and KCC Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Holdings and KCC Engineering
The main advantage of trading using opposite SK Holdings and KCC Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Holdings position performs unexpectedly, KCC Engineering 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 KCC Engineering will offset losses from the drop in KCC Engineering's long position.| SK Holdings vs. Hankook Furniture Co | SK Holdings vs. Homecast CoLtd | SK Holdings vs. Hansol Homedeco Co | SK Holdings vs. ABOV Semiconductor Co |
| KCC Engineering vs. Amogreentech Co | KCC Engineering vs. SungMoon Electronics Co | KCC Engineering vs. Jeju Air Co | KCC Engineering vs. Seoul Electronics Telecom |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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