Correlation Between LEENO Industrial and Korea Petro
Can any of the company-specific risk be diversified away by investing in both LEENO Industrial and Korea Petro 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 LEENO Industrial and Korea Petro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LEENO Industrial and Korea Petro Chemical, you can compare the effects of market volatilities on LEENO Industrial and Korea Petro 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 LEENO Industrial with a short position of Korea Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEENO Industrial and Korea Petro.
Diversification Opportunities for LEENO Industrial and Korea Petro
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between LEENO and Korea is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding LEENO Industrial and Korea Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Petro Chemical and LEENO Industrial 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 LEENO Industrial are associated (or correlated) with Korea Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Petro Chemical has no effect on the direction of LEENO Industrial i.e., LEENO Industrial and Korea Petro go up and down completely randomly.
Pair Corralation between LEENO Industrial and Korea Petro
Assuming the 90 days trading horizon LEENO Industrial is expected to generate 3.78 times less return on investment than Korea Petro. But when comparing it to its historical volatility, LEENO Industrial is 1.03 times less risky than Korea Petro. It trades about 0.07 of its potential returns per unit of risk. Korea Petro Chemical is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 8,120,000 in Korea Petro Chemical on November 4, 2024 and sell it today you would earn a total of 990,000 from holding Korea Petro Chemical or generate 12.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LEENO Industrial vs. Korea Petro Chemical
Performance |
| Timeline |
| LEENO Industrial |
| Korea Petro Chemical |
LEENO Industrial and Korea Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LEENO Industrial and Korea Petro
The main advantage of trading using opposite LEENO Industrial and Korea Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEENO Industrial position performs unexpectedly, Korea Petro 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 Korea Petro will offset losses from the drop in Korea Petro's long position.| LEENO Industrial vs. Tokai Carbon Korea | LEENO Industrial vs. LF Co | LEENO Industrial vs. Koh Young Technology |
| Korea Petro vs. Samyoung Electronics Co | Korea Petro vs. Daewoo Electronic Components | Korea Petro vs. Guyoung Technology Co | Korea Petro vs. Seers Technology |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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