Correlation Between Kukil Metal and Cheryong Industrial

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Can any of the company-specific risk be diversified away by investing in both Kukil Metal and Cheryong Industrial 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 Kukil Metal and Cheryong Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kukil Metal Co and Cheryong Industrial CoLtd, you can compare the effects of market volatilities on Kukil Metal and Cheryong Industrial 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 Kukil Metal with a short position of Cheryong Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kukil Metal and Cheryong Industrial.

Diversification Opportunities for Kukil Metal and Cheryong Industrial

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Kukil and Cheryong is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Kukil Metal Co and Cheryong Industrial CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheryong Industrial CoLtd and Kukil Metal 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 Kukil Metal Co are associated (or correlated) with Cheryong Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheryong Industrial CoLtd has no effect on the direction of Kukil Metal i.e., Kukil Metal and Cheryong Industrial go up and down completely randomly.

Pair Corralation between Kukil Metal and Cheryong Industrial

Assuming the 90 days trading horizon Kukil Metal Co is expected to under-perform the Cheryong Industrial. In addition to that, Kukil Metal is 1.01 times more volatile than Cheryong Industrial CoLtd. It trades about 0.0 of its total potential returns per unit of risk. Cheryong Industrial CoLtd is currently generating about 0.03 per unit of volatility. If you would invest  448,460  in Cheryong Industrial CoLtd on October 3, 2024 and sell it today you would earn a total of  101,540  from holding Cheryong Industrial CoLtd or generate 22.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Kukil Metal Co  vs.  Cheryong Industrial CoLtd

 Performance 
       Timeline  
Kukil Metal 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kukil Metal Co 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Cheryong Industrial CoLtd 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Cheryong Industrial CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Kukil Metal and Cheryong Industrial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kukil Metal and Cheryong Industrial

The main advantage of trading using opposite Kukil Metal and Cheryong Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kukil Metal position performs unexpectedly, Cheryong Industrial 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 Cheryong Industrial will offset losses from the drop in Cheryong Industrial's long position.
The idea behind Kukil Metal Co and Cheryong Industrial CoLtd 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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