Correlation Between SK Chemicals and Aurora World
Can any of the company-specific risk be diversified away by investing in both SK Chemicals and Aurora World 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 Aurora World 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 Aurora World, you can compare the effects of market volatilities on SK Chemicals and Aurora World 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 Aurora World. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Chemicals and Aurora World.
Diversification Opportunities for SK Chemicals and Aurora World
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 28513K and Aurora is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding SK Chemicals Co and Aurora World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora World 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 Aurora World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora World has no effect on the direction of SK Chemicals i.e., SK Chemicals and Aurora World go up and down completely randomly.
Pair Corralation between SK Chemicals and Aurora World
Assuming the 90 days trading horizon SK Chemicals Co is expected to under-perform the Aurora World. In addition to that, SK Chemicals is 1.06 times more volatile than Aurora World. It trades about -0.08 of its total potential returns per unit of risk. Aurora World is currently generating about -0.03 per unit of volatility. If you would invest 729,547 in Aurora World on September 12, 2024 and sell it today you would lose (124,547) from holding Aurora World or give up 17.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.71% |
| Values | Daily Returns |
SK Chemicals Co vs. Aurora World
Performance |
| Timeline |
| SK Chemicals |
| Aurora World |
SK Chemicals and Aurora World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Chemicals and Aurora World
The main advantage of trading using opposite SK Chemicals and Aurora World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Chemicals position performs unexpectedly, Aurora World 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 Aurora World will offset losses from the drop in Aurora World's long position.| SK Chemicals vs. Kumho Petro Chemical | SK Chemicals vs. SK Chemicals Co | SK Chemicals vs. Solution Advanced Technology | SK Chemicals vs. Busan Industrial Co |
| Aurora World vs. Ssangyong Information Communication | Aurora World vs. PJ Metal Co | Aurora World vs. CG Hi Tech | Aurora World vs. Korea Computer |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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