Correlation Between INNOX Advanced and Kukdong Oil
Can any of the company-specific risk be diversified away by investing in both INNOX Advanced and Kukdong Oil 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 INNOX Advanced and Kukdong Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INNOX Advanced Materials and Kukdong Oil Chemicals, you can compare the effects of market volatilities on INNOX Advanced and Kukdong Oil 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 INNOX Advanced with a short position of Kukdong Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of INNOX Advanced and Kukdong Oil.
Diversification Opportunities for INNOX Advanced and Kukdong Oil
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between INNOX and Kukdong is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding INNOX Advanced Materials and Kukdong Oil Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukdong Oil Chemicals and INNOX Advanced 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 INNOX Advanced Materials are associated (or correlated) with Kukdong Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukdong Oil Chemicals has no effect on the direction of INNOX Advanced i.e., INNOX Advanced and Kukdong Oil go up and down completely randomly.
Pair Corralation between INNOX Advanced and Kukdong Oil
Assuming the 90 days trading horizon INNOX Advanced Materials is expected to generate 7.48 times more return on investment than Kukdong Oil. However, INNOX Advanced is 7.48 times more volatile than Kukdong Oil Chemicals. It trades about 0.1 of its potential returns per unit of risk. Kukdong Oil Chemicals is currently generating about 0.18 per unit of risk. If you would invest 2,710,000 in INNOX Advanced Materials on November 27, 2024 and sell it today you would earn a total of 155,000 from holding INNOX Advanced Materials or generate 5.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INNOX Advanced Materials vs. Kukdong Oil Chemicals
Performance |
| Timeline |
| INNOX Advanced Materials |
| Kukdong Oil Chemicals |
INNOX Advanced and Kukdong Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INNOX Advanced and Kukdong Oil
The main advantage of trading using opposite INNOX Advanced and Kukdong Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INNOX Advanced position performs unexpectedly, Kukdong Oil 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 Kukdong Oil will offset losses from the drop in Kukdong Oil's long position.| INNOX Advanced vs. Neungyule Education | INNOX Advanced vs. Korea Information Engineering | INNOX Advanced vs. Hanwha InvestmentSecurities Co | INNOX Advanced vs. DB Financial Investment |
| Kukdong Oil vs. Sangsangin Investment Securities | Kukdong Oil vs. Ssangyong Materials Corp | Kukdong Oil vs. Golden Bridge Investment | Kukdong Oil vs. EBEST Investment Securities |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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