Correlation Between SK Chemicals and Daewon Chemical
Can any of the company-specific risk be diversified away by investing in both SK Chemicals and Daewon 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 Daewon 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 Daewon Chemical Co, you can compare the effects of market volatilities on SK Chemicals and Daewon 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 Daewon Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Chemicals and Daewon Chemical.
Diversification Opportunities for SK Chemicals and Daewon Chemical
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 28513K and Daewon is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SK Chemicals Co and Daewon Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewon 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 Daewon Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewon Chemical has no effect on the direction of SK Chemicals i.e., SK Chemicals and Daewon Chemical go up and down completely randomly.
Pair Corralation between SK Chemicals and Daewon Chemical
Assuming the 90 days trading horizon SK Chemicals Co is expected to generate 0.44 times more return on investment than Daewon Chemical. However, SK Chemicals Co is 2.27 times less risky than Daewon Chemical. It trades about -0.11 of its potential returns per unit of risk. Daewon Chemical Co is currently generating about -0.06 per unit of risk. If you would invest 2,953,862 in SK Chemicals Co on November 5, 2024 and sell it today you would lose (1,068,862) from holding SK Chemicals Co or give up 36.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Chemicals Co vs. Daewon Chemical Co
Performance |
| Timeline |
| SK Chemicals |
| Daewon Chemical |
SK Chemicals and Daewon Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Chemicals and Daewon Chemical
The main advantage of trading using opposite SK Chemicals and Daewon Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Chemicals position performs unexpectedly, Daewon 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 Daewon Chemical will offset losses from the drop in Daewon Chemical's long position.| SK Chemicals vs. Lake Materials Co | SK Chemicals vs. Taegu Broadcasting | SK Chemicals vs. TOPMATERIAL LTD | SK Chemicals vs. Hana Materials |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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