Correlation Between EBEST Investment and Kukdong Oil

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

By analyzing existing cross correlation between EBEST Investment Securities and Kukdong Oil Chemicals, you can compare the effects of market volatilities on EBEST Investment 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 EBEST Investment with a short position of Kukdong Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBEST Investment and Kukdong Oil.

Diversification Opportunities for EBEST Investment and Kukdong Oil

0.82

Correlation Coefficient

EBEST Investment  Kukdong Oil

Very poor diversification

The 3 months correlation between EBEST and Kukdong is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding EBEST Investment Securities 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 EBEST Investment 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 EBEST Investment Securities 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 EBEST Investment i.e., EBEST Investment and Kukdong Oil go up and down completely randomly.

Pair Corralation between EBEST Investment and Kukdong Oil

Assuming the 90 days trading horizon EBEST Investment Securities is expected to under-perform the Kukdong Oil. But the stock apears to be less risky and, when comparing its historical volatility, EBEST Investment Securities is 1.55 times less risky than Kukdong Oil. The stock trades about -0.01 of its potential returns per unit of risk. The Kukdong Oil Chemicals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  335,313  in Kukdong Oil Chemicals on September 20, 2024 and sell it today you would earn a total of  24,187  from holding Kukdong Oil Chemicals or generate 7.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.79%
Values	Daily Returns

EBEST Investment Securities  vs.  Kukdong Oil Chemicals

EBEST Investment Sec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EBEST Investment Securities 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.

Kukdong Oil Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with EBEST Investment and Kukdong Oil

The main advantage of trading using opposite EBEST Investment and Kukdong Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBEST Investment 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.

The idea behind EBEST Investment Securities and Kukdong Oil Chemicals 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.