Correlation Between Pyung Hwa and Kumho Petro
Can any of the company-specific risk be diversified away by investing in both Pyung Hwa and Kumho 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 Pyung Hwa and Kumho Petro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pyung Hwa Industrial and Kumho Petro Chemical, you can compare the effects of market volatilities on Pyung Hwa and Kumho 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 Pyung Hwa with a short position of Kumho Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pyung Hwa and Kumho Petro.
Diversification Opportunities for Pyung Hwa and Kumho Petro
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pyung and Kumho is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Pyung Hwa Industrial and Kumho Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho Petro Chemical and Pyung Hwa 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 Pyung Hwa Industrial are associated (or correlated) with Kumho Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Petro Chemical has no effect on the direction of Pyung Hwa i.e., Pyung Hwa and Kumho Petro go up and down completely randomly.
Pair Corralation between Pyung Hwa and Kumho Petro
Assuming the 90 days trading horizon Pyung Hwa Industrial is expected to generate 1.81 times more return on investment than Kumho Petro. However, Pyung Hwa is 1.81 times more volatile than Kumho Petro Chemical. It trades about 0.01 of its potential returns per unit of risk. Kumho Petro Chemical is currently generating about -0.03 per unit of risk. If you would invest 126,100 in Pyung Hwa Industrial on October 29, 2024 and sell it today you would earn a total of 1,500 from holding Pyung Hwa Industrial or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pyung Hwa Industrial vs. Kumho Petro Chemical
Performance |
| Timeline |
| Pyung Hwa Industrial |
| Kumho Petro Chemical |
Pyung Hwa and Kumho Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pyung Hwa and Kumho Petro
The main advantage of trading using opposite Pyung Hwa and Kumho Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pyung Hwa position performs unexpectedly, Kumho 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 Kumho Petro will offset losses from the drop in Kumho Petro's long position.| Pyung Hwa vs. KB Financial Group | Pyung Hwa vs. Shinhan Financial Group | Pyung Hwa vs. Hana Financial | Pyung Hwa vs. Woori Financial Group |
| Kumho Petro vs. Stic Investments | Kumho Petro vs. Samsung Publishing Co | Kumho Petro vs. LB Investment | Kumho Petro vs. Wireless Power Amplifier |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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