Correlation Between KEYEASTCoLtd and Kukdong Oil
Can any of the company-specific risk be diversified away by investing in both KEYEASTCoLtd 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 KEYEASTCoLtd and Kukdong Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KEYEASTCoLtd and Kukdong Oil Chemicals, you can compare the effects of market volatilities on KEYEASTCoLtd 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 KEYEASTCoLtd with a short position of Kukdong Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of KEYEASTCoLtd and Kukdong Oil.
Diversification Opportunities for KEYEASTCoLtd and Kukdong Oil
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KEYEASTCoLtd and Kukdong is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding KEYEASTCoLtd 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 KEYEASTCoLtd 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 KEYEASTCoLtd 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 KEYEASTCoLtd i.e., KEYEASTCoLtd and Kukdong Oil go up and down completely randomly.
Pair Corralation between KEYEASTCoLtd and Kukdong Oil
Assuming the 90 days trading horizon KEYEASTCoLtd is expected to under-perform the Kukdong Oil. But the stock apears to be less risky and, when comparing its historical volatility, KEYEASTCoLtd is 1.01 times less risky than Kukdong Oil. The stock trades about -0.05 of its potential returns per unit of risk. The Kukdong Oil Chemicals is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 518,732 in Kukdong Oil Chemicals on August 25, 2024 and sell it today you would lose (155,732) from holding Kukdong Oil Chemicals or give up 30.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KEYEASTCoLtd vs. Kukdong Oil Chemicals
Performance |
| Timeline |
| KEYEASTCoLtd |
| Kukdong Oil Chemicals |
KEYEASTCoLtd and Kukdong Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KEYEASTCoLtd and Kukdong Oil
The main advantage of trading using opposite KEYEASTCoLtd and Kukdong Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KEYEASTCoLtd 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.| KEYEASTCoLtd vs. Kukdong Oil Chemicals | KEYEASTCoLtd vs. SK Chemicals Co | KEYEASTCoLtd vs. Zaram Technology | KEYEASTCoLtd vs. Jeju Air Co |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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