Correlation Between SK Chemicals and Dongnam Chemical
Can any of the company-specific risk be diversified away by investing in both SK Chemicals and Dongnam Chemical 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 Dongnam Chemical 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 Dongnam Chemical Co, you can compare the effects of market volatilities on SK Chemicals and Dongnam Chemical 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 Dongnam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Chemicals and Dongnam Chemical.
Diversification Opportunities for SK Chemicals and Dongnam Chemical
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 28513K and Dongnam is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SK Chemicals Co and Dongnam Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongnam Chemical 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 Dongnam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongnam Chemical has no effect on the direction of SK Chemicals i.e., SK Chemicals and Dongnam Chemical go up and down completely randomly.
Pair Corralation between SK Chemicals and Dongnam Chemical
Assuming the 90 days trading horizon SK Chemicals Co is expected to under-perform the Dongnam Chemical. In addition to that, SK Chemicals is 1.01 times more volatile than Dongnam Chemical Co. It trades about -0.02 of its total potential returns per unit of risk. Dongnam Chemical Co is currently generating about 0.38 per unit of volatility. If you would invest 2,962,895 in Dongnam Chemical Co on October 12, 2024 and sell it today you would earn a total of 452,105 from holding Dongnam Chemical Co or generate 15.26% 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. Dongnam Chemical Co
Performance |
| Timeline |
| SK Chemicals |
| Dongnam Chemical |
SK Chemicals and Dongnam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Chemicals and Dongnam Chemical
The main advantage of trading using opposite SK Chemicals and Dongnam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Chemicals position performs unexpectedly, Dongnam Chemical 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 Dongnam Chemical will offset losses from the drop in Dongnam Chemical's long position.| SK Chemicals vs. Sung Bo Chemicals | SK Chemicals vs. Jeju Beer Co | SK Chemicals vs. Hankook Furniture Co | SK Chemicals vs. Asiana Airlines |
| Dongnam Chemical vs. KG Eco Technology | Dongnam Chemical vs. Sung Bo Chemicals | Dongnam Chemical vs. SK Chemicals Co | Dongnam Chemical vs. ENF 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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