Correlation Between Kumho Petro and Duksan Hi

Can any of the company-specific risk be diversified away by investing in both Kumho Petro and Duksan Hi 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 Duksan Hi 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 Duksan Hi Metal, you can compare the effects of market volatilities on Kumho Petro and Duksan Hi 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 Duksan Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumho Petro and Duksan Hi.

Diversification Opportunities for Kumho Petro and Duksan Hi

0.31

Correlation Coefficient

Kumho Petro  Duksan Hi

Weak diversification

The 3 months correlation between Kumho and Duksan is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Kumho Petro Chemical and Duksan Hi Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duksan Hi Metal 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 Duksan Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duksan Hi Metal has no effect on the direction of Kumho Petro i.e., Kumho Petro and Duksan Hi go up and down completely randomly.

Pair Corralation between Kumho Petro and Duksan Hi

Assuming the 90 days trading horizon Kumho Petro Chemical is expected to generate 0.73 times more return on investment than Duksan Hi. However, Kumho Petro Chemical is 1.37 times less risky than Duksan Hi. It trades about 0.13 of its potential returns per unit of risk. Duksan Hi Metal is currently generating about 0.05 per unit of risk. If you would invest  4,695,000  in Kumho Petro Chemical on December 31, 2024 and sell it today you would earn a total of  725,000  from holding Kumho Petro Chemical or generate 15.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kumho Petro Chemical  vs.  Duksan Hi Metal

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 10 (%) 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.

Duksan Hi Metal

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Duksan Hi Metal are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Duksan Hi may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Kumho Petro and Duksan Hi

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

The idea behind Kumho Petro Chemical and Duksan Hi Metal 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.