Correlation Between Jeong Moon and Kukdong Oil
Can any of the company-specific risk be diversified away by investing in both Jeong Moon and Kukdong Oil 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 Jeong Moon and Kukdong Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeong Moon Information and Kukdong Oil Chemicals, you can compare the effects of market volatilities on Jeong Moon and Kukdong Oil 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 Jeong Moon with a short position of Kukdong Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeong Moon and Kukdong Oil.
Diversification Opportunities for Jeong Moon and Kukdong Oil
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jeong and Kukdong is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Jeong Moon Information and Kukdong Oil Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukdong Oil Chemicals and Jeong Moon 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 Jeong Moon Information are associated (or correlated) with Kukdong Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukdong Oil Chemicals has no effect on the direction of Jeong Moon i.e., Jeong Moon and Kukdong Oil go up and down completely randomly.
Pair Corralation between Jeong Moon and Kukdong Oil
Assuming the 90 days trading horizon Jeong Moon Information is expected to under-perform the Kukdong Oil. In addition to that, Jeong Moon is 1.05 times more volatile than Kukdong Oil Chemicals. It trades about -0.05 of its total potential returns per unit of risk. Kukdong Oil Chemicals is currently generating about -0.02 per unit of volatility. If you would invest 420,500 in Kukdong Oil Chemicals on September 25, 2024 and sell it today you would lose (57,000) from holding Kukdong Oil Chemicals or give up 13.56% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Jeong Moon Information vs. Kukdong Oil Chemicals
Performance |
Timeline |
Jeong Moon Information |
Kukdong Oil Chemicals |
Jeong Moon and Kukdong Oil Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Jeong Moon and Kukdong Oil
The main advantage of trading using opposite Jeong Moon and Kukdong Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeong Moon position performs unexpectedly, Kukdong Oil 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 Kukdong Oil will offset losses from the drop in Kukdong Oil's long position.Jeong Moon vs. Samhyun Steel Co | Jeong Moon vs. ECSTELECOM Co | Jeong Moon vs. Finebesteel | Jeong Moon vs. Daechang Steel Co |
Kukdong Oil vs. Nice Information Telecommunication | Kukdong Oil vs. Jeong Moon Information | Kukdong Oil vs. Shinsegae Information Communication | Kukdong Oil vs. Korean Reinsurance 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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