Correlation Between Idemitsu Kosan and Kunlun Energy
Can any of the company-specific risk be diversified away by investing in both Idemitsu Kosan and Kunlun Energy 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 Idemitsu Kosan and Kunlun Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Idemitsu Kosan CoLtd and Kunlun Energy Co, you can compare the effects of market volatilities on Idemitsu Kosan and Kunlun Energy 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 Idemitsu Kosan with a short position of Kunlun Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Idemitsu Kosan and Kunlun Energy.
Diversification Opportunities for Idemitsu Kosan and Kunlun Energy
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Idemitsu and Kunlun is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Idemitsu Kosan CoLtd and Kunlun Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kunlun Energy and Idemitsu Kosan 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 Idemitsu Kosan CoLtd are associated (or correlated) with Kunlun Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kunlun Energy has no effect on the direction of Idemitsu Kosan i.e., Idemitsu Kosan and Kunlun Energy go up and down completely randomly.
Pair Corralation between Idemitsu Kosan and Kunlun Energy
Assuming the 90 days horizon Idemitsu Kosan CoLtd is expected to generate 0.07 times more return on investment than Kunlun Energy. However, Idemitsu Kosan CoLtd is 13.95 times less risky than Kunlun Energy. It trades about 0.19 of its potential returns per unit of risk. Kunlun Energy Co is currently generating about 0.01 per unit of risk. If you would invest 659.00 in Idemitsu Kosan CoLtd on October 7, 2024 and sell it today you would earn a total of 10.00 from holding Idemitsu Kosan CoLtd or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Idemitsu Kosan CoLtd vs. Kunlun Energy Co
Performance |
| Timeline |
| Idemitsu Kosan CoLtd |
| Kunlun Energy |
Idemitsu Kosan and Kunlun Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Idemitsu Kosan and Kunlun Energy
The main advantage of trading using opposite Idemitsu Kosan and Kunlun Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Idemitsu Kosan position performs unexpectedly, Kunlun Energy 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 Kunlun Energy will offset losses from the drop in Kunlun Energy's long position.| Idemitsu Kosan vs. Eneos Holdings ADR | Idemitsu Kosan vs. HF Sinclair Corp | Idemitsu Kosan vs. Idemitsu Kosan Co | Idemitsu Kosan vs. PBF Energy |
| Kunlun Energy vs. Idemitsu Kosan CoLtd | Kunlun Energy vs. Eneos Holdings ADR | Kunlun Energy vs. HF Sinclair Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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