Correlation Between Coloray International and Korea Petro
Can any of the company-specific risk be diversified away by investing in both Coloray International and Korea 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 Coloray International and Korea Petro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coloray International Investment and Korea Petro Chemical, you can compare the effects of market volatilities on Coloray International and Korea 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 Coloray International with a short position of Korea Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coloray International and Korea Petro.
Diversification Opportunities for Coloray International and Korea Petro
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coloray and Korea is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Coloray International Investme and Korea Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Petro Chemical and Coloray International 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 Coloray International Investment are associated (or correlated) with Korea Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Petro Chemical has no effect on the direction of Coloray International i.e., Coloray International and Korea Petro go up and down completely randomly.
Pair Corralation between Coloray International and Korea Petro
Assuming the 90 days trading horizon Coloray International Investment is expected to generate 0.82 times more return on investment than Korea Petro. However, Coloray International Investment is 1.21 times less risky than Korea Petro. It trades about 0.69 of its potential returns per unit of risk. Korea Petro Chemical is currently generating about 0.33 per unit of risk. If you would invest 55,900 in Coloray International Investment on November 3, 2024 and sell it today you would earn a total of 20,800 from holding Coloray International Investment or generate 37.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coloray International Investme vs. Korea Petro Chemical
Performance |
| Timeline |
| Coloray International |
| Korea Petro Chemical |
Coloray International and Korea Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coloray International and Korea Petro
The main advantage of trading using opposite Coloray International and Korea Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coloray International position performs unexpectedly, Korea 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 Korea Petro will offset losses from the drop in Korea Petro's long position.| Coloray International vs. Lotte Data Communication | Coloray International vs. Korea Computer | Coloray International vs. CG Hi Tech | Coloray International vs. Sangsin Energy Display |
| Korea Petro vs. Woori Financial Group | Korea Petro vs. Lotte Non Life Insurance | Korea Petro vs. KB Financial Group | Korea Petro vs. Lotte Data Communication |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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