Correlation Between SK Chemicals and Cloud Air
Can any of the company-specific risk be diversified away by investing in both SK Chemicals and Cloud Air 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 SK Chemicals and Cloud Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Chemicals Co and Cloud Air CoLtd, you can compare the effects of market volatilities on SK Chemicals and Cloud Air 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 SK Chemicals with a short position of Cloud Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Chemicals and Cloud Air.
Diversification Opportunities for SK Chemicals and Cloud Air
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 285130 and Cloud is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SK Chemicals Co and Cloud Air CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloud Air CoLtd and SK Chemicals 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 SK Chemicals Co are associated (or correlated) with Cloud Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloud Air CoLtd has no effect on the direction of SK Chemicals i.e., SK Chemicals and Cloud Air go up and down completely randomly.
Pair Corralation between SK Chemicals and Cloud Air
Assuming the 90 days trading horizon SK Chemicals Co is expected to generate 1.47 times more return on investment than Cloud Air. However, SK Chemicals is 1.47 times more volatile than Cloud Air CoLtd. It trades about 0.02 of its potential returns per unit of risk. Cloud Air CoLtd is currently generating about -0.04 per unit of risk. If you would invest 4,480,000 in SK Chemicals Co on September 12, 2024 and sell it today you would earn a total of 20,000 from holding SK Chemicals Co or generate 0.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Chemicals Co vs. Cloud Air CoLtd
Performance |
| Timeline |
| SK Chemicals |
| Cloud Air CoLtd |
SK Chemicals and Cloud Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Chemicals and Cloud Air
The main advantage of trading using opposite SK Chemicals and Cloud Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Chemicals position performs unexpectedly, Cloud Air 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 Cloud Air will offset losses from the drop in Cloud Air's long position.| SK Chemicals vs. LG Chemicals | SK Chemicals vs. POSCO Holdings | SK Chemicals vs. Hanwha Solutions | SK Chemicals vs. Lotte Chemical Corp |
| Cloud Air vs. SK Hynix | Cloud Air vs. People Technology | Cloud Air vs. Hana Materials | Cloud Air vs. SIMMTECH 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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