Correlation Between People Technology and SK Chemicals
Can any of the company-specific risk be diversified away by investing in both People Technology and SK Chemicals 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 People Technology and SK Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between People Technology and SK Chemicals Co, you can compare the effects of market volatilities on People Technology and SK Chemicals 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 People Technology with a short position of SK Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of People Technology and SK Chemicals.
Diversification Opportunities for People Technology and SK Chemicals
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between People and 28513K is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding People Technology and SK Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Chemicals and People Technology 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 People Technology are associated (or correlated) with SK Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Chemicals has no effect on the direction of People Technology i.e., People Technology and SK Chemicals go up and down completely randomly.
Pair Corralation between People Technology and SK Chemicals
Assuming the 90 days trading horizon People Technology is expected to under-perform the SK Chemicals. In addition to that, People Technology is 1.4 times more volatile than SK Chemicals Co. It trades about -0.1 of its total potential returns per unit of risk. SK Chemicals Co is currently generating about 0.08 per unit of volatility. If you would invest 1,969,000 in SK Chemicals Co on September 19, 2024 and sell it today you would earn a total of 66,000 from holding SK Chemicals Co or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
People Technology vs. SK Chemicals Co
Performance |
| Timeline |
| People Technology |
| SK Chemicals |
People Technology and SK Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with People Technology and SK Chemicals
The main advantage of trading using opposite People Technology and SK Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if People Technology position performs unexpectedly, SK Chemicals 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 SK Chemicals will offset losses from the drop in SK Chemicals' long position.| People Technology vs. Korea New Network | People Technology vs. Solution Advanced Technology | People Technology vs. Busan Industrial Co | People Technology vs. Busan Ind |
| SK Chemicals vs. Kumho Petro Chemical | SK Chemicals vs. SK Chemicals Co | SK Chemicals vs. Solution Advanced Technology | SK Chemicals vs. Busan Industrial Co |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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