Correlation Between SK Chemicals and Kolon Plastics
Can any of the company-specific risk be diversified away by investing in both SK Chemicals and Kolon Plastics 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 Kolon Plastics 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 Kolon Plastics, you can compare the effects of market volatilities on SK Chemicals and Kolon Plastics 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 Kolon Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Chemicals and Kolon Plastics.
Diversification Opportunities for SK Chemicals and Kolon Plastics
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 285130 and Kolon is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding SK Chemicals Co and Kolon Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kolon Plastics 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 Kolon Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kolon Plastics has no effect on the direction of SK Chemicals i.e., SK Chemicals and Kolon Plastics go up and down completely randomly.
Pair Corralation between SK Chemicals and Kolon Plastics
Assuming the 90 days trading horizon SK Chemicals Co is expected to under-perform the Kolon Plastics. In addition to that, SK Chemicals is 1.13 times more volatile than Kolon Plastics. It trades about -0.08 of its total potential returns per unit of risk. Kolon Plastics is currently generating about 0.09 per unit of volatility. If you would invest 531,000 in Kolon Plastics on October 12, 2024 and sell it today you would earn a total of 15,000 from holding Kolon Plastics or generate 2.82% 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. Kolon Plastics
Performance |
| Timeline |
| SK Chemicals |
| Kolon Plastics |
SK Chemicals and Kolon Plastics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Chemicals and Kolon Plastics
The main advantage of trading using opposite SK Chemicals and Kolon Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Chemicals position performs unexpectedly, Kolon Plastics 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 Kolon Plastics will offset losses from the drop in Kolon Plastics' long position.| SK Chemicals vs. BIT Computer Co | SK Chemicals vs. Hwangkum Steel Technology | SK Chemicals vs. Asia Technology Co | SK Chemicals vs. KG Eco Technology |
| Kolon Plastics vs. Hyundai Home Shopping | Kolon Plastics vs. Daejung Chemicals Metals | Kolon Plastics vs. Organic Special Pet | Kolon Plastics 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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