Correlation Between Aloys and SK Chemicals
Can any of the company-specific risk be diversified away by investing in both Aloys and SK Chemicals 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 Aloys and SK Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aloys Inc and SK Chemicals Co, you can compare the effects of market volatilities on Aloys and SK Chemicals 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 Aloys with a short position of SK Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aloys and SK Chemicals.
Diversification Opportunities for Aloys and SK Chemicals
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aloys and 28513K is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Aloys Inc and SK Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Chemicals and Aloys 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 Aloys Inc are associated (or correlated) with SK Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Chemicals has no effect on the direction of Aloys i.e., Aloys and SK Chemicals go up and down completely randomly.
Pair Corralation between Aloys and SK Chemicals
Assuming the 90 days trading horizon Aloys Inc is expected to under-perform the SK Chemicals. In addition to that, Aloys is 2.97 times more volatile than SK Chemicals Co. It trades about -0.15 of its total potential returns per unit of risk. SK Chemicals Co is currently generating about 0.09 per unit of volatility. If you would invest 1,974,000 in SK Chemicals Co on September 14, 2024 and sell it today you would earn a total of 71,000 from holding SK Chemicals Co or generate 3.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Aloys Inc vs. SK Chemicals Co
Performance |
| Timeline |
| Aloys Inc |
| SK Chemicals |
Aloys and SK Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aloys and SK Chemicals
The main advantage of trading using opposite Aloys and SK Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aloys position performs unexpectedly, SK Chemicals 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 SK Chemicals will offset losses from the drop in SK Chemicals' long position.| Aloys vs. Kyung In Synthetic Corp | Aloys vs. Namhae Chemical | Aloys vs. Sung Bo Chemicals | Aloys vs. Tae Kyung Chemical |
| SK Chemicals vs. Kumho Petro Chemical | SK Chemicals vs. SK Chemicals Co | SK Chemicals vs. Solution Advanced Technology | SK Chemicals vs. Busan Industrial 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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