Correlation Between Korea Petro and Ray
Can any of the company-specific risk be diversified away by investing in both Korea Petro and Ray 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 Korea Petro and Ray into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Petro Chemical and Ray Co, you can compare the effects of market volatilities on Korea Petro and Ray 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 Korea Petro with a short position of Ray. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Petro and Ray.
Diversification Opportunities for Korea Petro and Ray
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Korea and Ray is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Korea Petro Chemical and Ray Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ray Co and Korea Petro 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 Korea Petro Chemical are associated (or correlated) with Ray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ray Co has no effect on the direction of Korea Petro i.e., Korea Petro and Ray go up and down completely randomly.
Pair Corralation between Korea Petro and Ray
Assuming the 90 days trading horizon Korea Petro is expected to generate 1.54 times less return on investment than Ray. But when comparing it to its historical volatility, Korea Petro Chemical is 1.14 times less risky than Ray. It trades about 0.11 of its potential returns per unit of risk. Ray Co is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 582,000 in Ray Co on December 30, 2024 and sell it today you would earn a total of 218,000 from holding Ray Co or generate 37.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Korea Petro Chemical vs. Ray Co
Performance |
Timeline |
Korea Petro Chemical |
Ray Co |
Korea Petro and Ray Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Korea Petro and Ray
The main advantage of trading using opposite Korea Petro and Ray positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Petro position performs unexpectedly, Ray 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 Ray will offset losses from the drop in Ray's long position.Korea Petro vs. Hanmi Semiconductor Co | Korea Petro vs. ENF Technology Co | Korea Petro vs. Woori Technology | Korea Petro vs. AurosTechnology |
Ray vs. Digital Power Communications | Ray vs. Korea Information Communications | Ray vs. Nable Communications | Ray vs. WooDeumGee Farm 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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