Correlation Between SK Chemicals and Asia Technology
Can any of the company-specific risk be diversified away by investing in both SK Chemicals and Asia Technology 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 Asia Technology 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 Asia Technology Co, you can compare the effects of market volatilities on SK Chemicals and Asia Technology 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 Asia Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Chemicals and Asia Technology.
Diversification Opportunities for SK Chemicals and Asia Technology
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 285130 and Asia is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding SK Chemicals Co and Asia Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Technology 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 Asia Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Technology has no effect on the direction of SK Chemicals i.e., SK Chemicals and Asia Technology go up and down completely randomly.
Pair Corralation between SK Chemicals and Asia Technology
Assuming the 90 days trading horizon SK Chemicals Co is expected to generate 1.68 times more return on investment than Asia Technology. However, SK Chemicals is 1.68 times more volatile than Asia Technology Co. It trades about -0.09 of its potential returns per unit of risk. Asia Technology Co is currently generating about -0.15 per unit of risk. If you would invest 4,500,000 in SK Chemicals Co on October 12, 2024 and sell it today you would lose (150,000) from holding SK Chemicals Co or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Chemicals Co vs. Asia Technology Co
Performance |
| Timeline |
| SK Chemicals |
| Asia Technology |
SK Chemicals and Asia Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Chemicals and Asia Technology
The main advantage of trading using opposite SK Chemicals and Asia Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Chemicals position performs unexpectedly, Asia Technology 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 Asia Technology will offset losses from the drop in Asia Technology's long position.| SK Chemicals vs. Daewon Chemical Co | SK Chemicals vs. Jeju Beer Co | SK Chemicals vs. Tae Kyung Chemical | SK Chemicals vs. JC Chemical Co |
| Asia Technology vs. Miwon Chemicals Co | Asia Technology vs. SEOJEON ELECTRIC MACHINERY | Asia Technology vs. Hanshin Construction Co | Asia Technology vs. SK Chemicals 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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