Correlation Between SK Chemicals and Kukdong Oil
Can any of the company-specific risk be diversified away by investing in both SK Chemicals 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 SK Chemicals and Kukdong Oil 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 Kukdong Oil Chemicals, you can compare the effects of market volatilities on SK Chemicals 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 SK Chemicals with a short position of Kukdong Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Chemicals and Kukdong Oil.
Diversification Opportunities for SK Chemicals and Kukdong Oil
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 28513K and Kukdong is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding SK Chemicals Co 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 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 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 SK Chemicals i.e., SK Chemicals and Kukdong Oil go up and down completely randomly.
Pair Corralation between SK Chemicals and Kukdong Oil
Assuming the 90 days trading horizon SK Chemicals Co is expected to under-perform the Kukdong Oil. But the stock apears to be less risky and, when comparing its historical volatility, SK Chemicals Co is 2.02 times less risky than Kukdong Oil. The stock trades about -0.09 of its potential returns per unit of risk. The Kukdong Oil Chemicals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 368,964 in Kukdong Oil Chemicals on August 26, 2024 and sell it today you would lose (5,964) from holding Kukdong Oil Chemicals or give up 1.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Chemicals Co vs. Kukdong Oil Chemicals
Performance |
| Timeline |
| SK Chemicals |
| Kukdong Oil Chemicals |
SK Chemicals and Kukdong Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Chemicals and Kukdong Oil
The main advantage of trading using opposite SK Chemicals and Kukdong Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Chemicals 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.The idea behind SK Chemicals Co and Kukdong Oil Chemicals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Kukdong Oil vs. HB Technology TD | Kukdong Oil vs. Jeju Semiconductor Corp | Kukdong Oil vs. Shinhan Financial Group | Kukdong Oil vs. Guyoung Technology 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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