Correlation Between Cheryong Industrial and Kumho Petro
Can any of the company-specific risk be diversified away by investing in both Cheryong Industrial 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 Cheryong Industrial and Kumho Petro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheryong Industrial CoLtd and Kumho Petro Chemical, you can compare the effects of market volatilities on Cheryong Industrial 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 Cheryong Industrial with a short position of Kumho Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheryong Industrial and Kumho Petro.
Diversification Opportunities for Cheryong Industrial and Kumho Petro
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cheryong and Kumho is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial CoLtd 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 Cheryong 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 Cheryong Industrial CoLtd 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 Cheryong Industrial i.e., Cheryong Industrial and Kumho Petro go up and down completely randomly.
Pair Corralation between Cheryong Industrial and Kumho Petro
Assuming the 90 days trading horizon Cheryong Industrial CoLtd is expected to generate 2.91 times more return on investment than Kumho Petro. However, Cheryong Industrial is 2.91 times more volatile than Kumho Petro Chemical. It trades about 0.06 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 329,145 in Cheryong Industrial CoLtd on October 29, 2024 and sell it today you would earn a total of 374,855 from holding Cheryong Industrial CoLtd or generate 113.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheryong Industrial CoLtd vs. Kumho Petro Chemical
Performance |
| Timeline |
| Cheryong Industrial CoLtd |
| Kumho Petro Chemical |
Cheryong Industrial and Kumho Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheryong Industrial and Kumho Petro
The main advantage of trading using opposite Cheryong Industrial and Kumho Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheryong Industrial 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.| Cheryong Industrial vs. Display Tech Co | Cheryong Industrial vs. Wireless Power Amplifier | Cheryong Industrial vs. Sangsin Energy Display | Cheryong Industrial vs. Hankuk Steel Wire |
| 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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