Correlation Between Nasmedia and Kukdong Oil
Can any of the company-specific risk be diversified away by investing in both Nasmedia 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 Nasmedia and Kukdong Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasmedia Co and Kukdong Oil Chemicals, you can compare the effects of market volatilities on Nasmedia 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 Nasmedia with a short position of Kukdong Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasmedia and Kukdong Oil.
Diversification Opportunities for Nasmedia and Kukdong Oil
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nasmedia and Kukdong is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Nasmedia Co 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 Nasmedia 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 Nasmedia Co 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 Nasmedia i.e., Nasmedia and Kukdong Oil go up and down completely randomly.
Pair Corralation between Nasmedia and Kukdong Oil
Assuming the 90 days trading horizon Nasmedia Co is expected to under-perform the Kukdong Oil. In addition to that, Nasmedia is 2.11 times more volatile than Kukdong Oil Chemicals. It trades about -0.16 of its total potential returns per unit of risk. Kukdong Oil Chemicals is currently generating about -0.14 per unit of volatility. If you would invest 371,000 in Kukdong Oil Chemicals on August 29, 2024 and sell it today you would lose (8,500) from holding Kukdong Oil Chemicals or give up 2.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasmedia Co vs. Kukdong Oil Chemicals
Performance |
| Timeline |
| Nasmedia |
| Kukdong Oil Chemicals |
Nasmedia and Kukdong Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasmedia and Kukdong Oil
The main advantage of trading using opposite Nasmedia and Kukdong Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasmedia 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.The idea behind Nasmedia Co and Kukdong Oil Chemicals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Kukdong Oil vs. AptaBio Therapeutics | Kukdong Oil vs. Daewoo SBI SPAC | Kukdong Oil vs. Dream Security co | Kukdong Oil vs. Microfriend |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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