Correlation Between Cheryong Industrial and Korea Gas
Can any of the company-specific risk be diversified away by investing in both Cheryong Industrial and Korea Gas 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 Korea Gas 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 Korea Gas, you can compare the effects of market volatilities on Cheryong Industrial and Korea Gas 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 Korea Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheryong Industrial and Korea Gas.
Diversification Opportunities for Cheryong Industrial and Korea Gas
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cheryong and Korea is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial CoLtd and Korea Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Gas 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 Korea Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Gas has no effect on the direction of Cheryong Industrial i.e., Cheryong Industrial and Korea Gas go up and down completely randomly.
Pair Corralation between Cheryong Industrial and Korea Gas
Assuming the 90 days trading horizon Cheryong Industrial CoLtd is expected to generate 1.23 times more return on investment than Korea Gas. However, Cheryong Industrial is 1.23 times more volatile than Korea Gas. It trades about 0.04 of its potential returns per unit of risk. Korea Gas is currently generating about 0.05 per unit of risk. If you would invest 361,619 in Cheryong Industrial CoLtd on September 12, 2024 and sell it today you would earn a total of 134,381 from holding Cheryong Industrial CoLtd or generate 37.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheryong Industrial CoLtd vs. Korea Gas
Performance |
| Timeline |
| Cheryong Industrial CoLtd |
| Korea Gas |
Cheryong Industrial and Korea Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheryong Industrial and Korea Gas
The main advantage of trading using opposite Cheryong Industrial and Korea Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheryong Industrial position performs unexpectedly, Korea Gas 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 Korea Gas will offset losses from the drop in Korea Gas' long position.| Cheryong Industrial vs. Lion Chemtech Co | Cheryong Industrial vs. Nature and Environment | Cheryong Industrial vs. Solution Advanced Technology | Cheryong Industrial vs. Busan Industrial Co |
| Korea Gas vs. Pungguk Ethanol Industrial | Korea Gas vs. Cheryong Industrial CoLtd | Korea Gas vs. KakaoBank Corp | Korea Gas vs. MetaLabs 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 Stocks Directory module to find actively traded stocks across global markets.
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