Correlation Between Kukdo Chemical and Raontech

Can any of the company-specific risk be diversified away by investing in both Kukdo Chemical and Raontech 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 Kukdo Chemical and Raontech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kukdo Chemical Co and Raontech, you can compare the effects of market volatilities on Kukdo Chemical and Raontech 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 Kukdo Chemical with a short position of Raontech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukdo Chemical and Raontech.

Diversification Opportunities for Kukdo Chemical and Raontech

-0.25

Correlation Coefficient

Kukdo Chemical  Raontech

Very good diversification

The 3 months correlation between Kukdo and Raontech is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Kukdo Chemical Co and Raontech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raontech and Kukdo Chemical 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 Kukdo Chemical Co are associated (or correlated) with Raontech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raontech has no effect on the direction of Kukdo Chemical i.e., Kukdo Chemical and Raontech go up and down completely randomly.

Pair Corralation between Kukdo Chemical and Raontech

Assuming the 90 days trading horizon Kukdo Chemical Co is expected to generate 0.63 times more return on investment than Raontech. However, Kukdo Chemical Co is 1.59 times less risky than Raontech. It trades about 0.04 of its potential returns per unit of risk. Raontech is currently generating about -0.16 per unit of risk. If you would invest  2,926,958  in Kukdo Chemical Co on December 25, 2024 and sell it today you would earn a total of  98,042  from holding Kukdo Chemical Co or generate 3.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Kukdo Chemical Co  vs.  Raontech

Kukdo Chemical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kukdo Chemical Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Kukdo Chemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Raontech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Raontech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kukdo Chemical and Raontech

The main advantage of trading using opposite Kukdo Chemical and Raontech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukdo Chemical position performs unexpectedly, Raontech 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 Raontech will offset losses from the drop in Raontech's long position.

The idea behind Kukdo Chemical Co and Raontech pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.