Correlation Between Kumho Petro and Q Capital

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

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

Diversification Opportunities for Kumho Petro and Q Capital

0.14

Correlation Coefficient

Kumho Petro  Q Capital

Average diversification

The 3 months correlation between Kumho and 016600 is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Kumho Petro Chemical and Q Capital Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Q Capital Partners and Kumho 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 Kumho Petro Chemical are associated (or correlated) with Q Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Q Capital Partners has no effect on the direction of Kumho Petro i.e., Kumho Petro and Q Capital go up and down completely randomly.

Pair Corralation between Kumho Petro and Q Capital

Assuming the 90 days trading horizon Kumho Petro Chemical is expected to generate 1.09 times more return on investment than Q Capital. However, Kumho Petro is 1.09 times more volatile than Q Capital Partners. It trades about 0.11 of its potential returns per unit of risk. Q Capital Partners is currently generating about 0.0 per unit of risk. If you would invest  4,815,000  in Kumho Petro Chemical on December 29, 2024 and sell it today you would earn a total of  605,000  from holding Kumho Petro Chemical or generate 12.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Kumho Petro Chemical  vs.  Q Capital Partners

Kumho Petro Chemical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kumho Petro Chemical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kumho Petro sustained solid returns over the last few months and may actually be approaching a breakup point.

Q Capital Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Q Capital Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Q Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kumho Petro and Q Capital

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

The idea behind Kumho Petro Chemical and Q Capital Partners 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.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.