Correlation Between Daewoo Engineering and Kukdo Chemical
Can any of the company-specific risk be diversified away by investing in both Daewoo Engineering and Kukdo Chemical 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 Daewoo Engineering and Kukdo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo Engineering Construction and Kukdo Chemical Co, you can compare the effects of market volatilities on Daewoo Engineering and Kukdo Chemical 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 Daewoo Engineering with a short position of Kukdo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo Engineering and Kukdo Chemical.
Diversification Opportunities for Daewoo Engineering and Kukdo Chemical
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Daewoo and Kukdo is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo Engineering Constructio and Kukdo Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukdo Chemical and Daewoo Engineering 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 Daewoo Engineering Construction are associated (or correlated) with Kukdo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukdo Chemical has no effect on the direction of Daewoo Engineering i.e., Daewoo Engineering and Kukdo Chemical go up and down completely randomly.
Pair Corralation between Daewoo Engineering and Kukdo Chemical
Assuming the 90 days trading horizon Daewoo Engineering Construction is expected to generate 0.96 times more return on investment than Kukdo Chemical. However, Daewoo Engineering Construction is 1.04 times less risky than Kukdo Chemical. It trades about -0.05 of its potential returns per unit of risk. Kukdo Chemical Co is currently generating about -0.06 per unit of risk. If you would invest 323,500 in Daewoo Engineering Construction on October 26, 2024 and sell it today you would lose (5,500) from holding Daewoo Engineering Construction or give up 1.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo Engineering Constructio vs. Kukdo Chemical Co
Performance |
| Timeline |
| Daewoo Engineering |
| Kukdo Chemical |
Daewoo Engineering and Kukdo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo Engineering and Kukdo Chemical
The main advantage of trading using opposite Daewoo Engineering and Kukdo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo Engineering position performs unexpectedly, Kukdo Chemical 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 Kukdo Chemical will offset losses from the drop in Kukdo Chemical's long position.| Daewoo Engineering vs. HB Technology TD | Daewoo Engineering vs. Wireless Power Amplifier | Daewoo Engineering vs. Innowireless Co | Daewoo Engineering vs. Daol Investment Securities |
| Kukdo Chemical vs. Hyundai Green Food | Kukdo Chemical vs. FOODWELL Co | Kukdo Chemical vs. Nam Hwa Construction | Kukdo Chemical vs. Daewoo Engineering Construction |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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