Correlation Between Solution Advanced and Kumho Petro
Can any of the company-specific risk be diversified away by investing in both Solution Advanced and Kumho Petro 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 Solution Advanced and Kumho Petro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and Kumho Petro Chemical, you can compare the effects of market volatilities on Solution Advanced and Kumho Petro 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 Solution Advanced with a short position of Kumho Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Kumho Petro.
Diversification Opportunities for Solution Advanced and Kumho Petro
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solution and Kumho is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Kumho Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho Petro Chemical and Solution Advanced 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 Solution Advanced Technology are associated (or correlated) with Kumho Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Petro Chemical has no effect on the direction of Solution Advanced i.e., Solution Advanced and Kumho Petro go up and down completely randomly.
Pair Corralation between Solution Advanced and Kumho Petro
Assuming the 90 days trading horizon Solution Advanced Technology is expected to generate 1.66 times more return on investment than Kumho Petro. However, Solution Advanced is 1.66 times more volatile than Kumho Petro Chemical. It trades about 0.03 of its potential returns per unit of risk. Kumho Petro Chemical is currently generating about -0.17 per unit of risk. If you would invest 139,500 in Solution Advanced Technology on September 14, 2024 and sell it today you would earn a total of 1,900 from holding Solution Advanced Technology or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Advanced Technology vs. Kumho Petro Chemical
Performance |
| Timeline |
| Solution Advanced |
| Kumho Petro Chemical |
Solution Advanced and Kumho Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and Kumho Petro
The main advantage of trading using opposite Solution Advanced and Kumho Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced position performs unexpectedly, Kumho Petro 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 Kumho Petro will offset losses from the drop in Kumho Petro's long position.| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
| Kumho Petro vs. SK Chemicals Co | Kumho Petro vs. SK Chemicals Co | Kumho Petro vs. Solution Advanced Technology | Kumho Petro 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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