Correlation Between Cheryong Industrial and Pungguk Ethanol
Can any of the company-specific risk be diversified away by investing in both Cheryong Industrial and Pungguk Ethanol 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 Pungguk Ethanol 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 Pungguk Ethanol Industrial, you can compare the effects of market volatilities on Cheryong Industrial and Pungguk Ethanol 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 Pungguk Ethanol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheryong Industrial and Pungguk Ethanol.
Diversification Opportunities for Cheryong Industrial and Pungguk Ethanol
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cheryong and Pungguk is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial CoLtd and Pungguk Ethanol Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pungguk Ethanol Indu 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 Pungguk Ethanol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pungguk Ethanol Indu has no effect on the direction of Cheryong Industrial i.e., Cheryong Industrial and Pungguk Ethanol go up and down completely randomly.
Pair Corralation between Cheryong Industrial and Pungguk Ethanol
Assuming the 90 days trading horizon Cheryong Industrial CoLtd is expected to under-perform the Pungguk Ethanol. In addition to that, Cheryong Industrial is 5.32 times more volatile than Pungguk Ethanol Industrial. It trades about -0.27 of its total potential returns per unit of risk. Pungguk Ethanol Industrial is currently generating about -0.2 per unit of volatility. If you would invest 1,014,000 in Pungguk Ethanol Industrial on September 3, 2024 and sell it today you would lose (27,000) from holding Pungguk Ethanol Industrial or give up 2.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheryong Industrial CoLtd vs. Pungguk Ethanol Industrial
Performance |
| Timeline |
| Cheryong Industrial CoLtd |
| Pungguk Ethanol Indu |
Cheryong Industrial and Pungguk Ethanol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheryong Industrial and Pungguk Ethanol
The main advantage of trading using opposite Cheryong Industrial and Pungguk Ethanol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheryong Industrial position performs unexpectedly, Pungguk Ethanol 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 Pungguk Ethanol will offset losses from the drop in Pungguk Ethanol's long position.| Cheryong Industrial vs. SEOJEON ELECTRIC MACHINERY | Cheryong Industrial vs. NH Investment Securities | Cheryong Industrial vs. Keyang Electric Machinery | Cheryong Industrial vs. Atinum Investment Co |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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