Correlation Between Leaders Technology and SK Chemicals
Can any of the company-specific risk be diversified away by investing in both Leaders Technology and SK Chemicals 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 Leaders Technology and SK Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leaders Technology Investment and SK Chemicals Co, you can compare the effects of market volatilities on Leaders Technology and SK Chemicals 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 Leaders Technology with a short position of SK Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leaders Technology and SK Chemicals.
Diversification Opportunities for Leaders Technology and SK Chemicals
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leaders and 28513K is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Leaders Technology Investment and SK Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Chemicals and Leaders Technology 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 Leaders Technology Investment are associated (or correlated) with SK Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Chemicals has no effect on the direction of Leaders Technology i.e., Leaders Technology and SK Chemicals go up and down completely randomly.
Pair Corralation between Leaders Technology and SK Chemicals
Assuming the 90 days trading horizon Leaders Technology Investment is expected to under-perform the SK Chemicals. In addition to that, Leaders Technology is 2.21 times more volatile than SK Chemicals Co. It trades about -0.18 of its total potential returns per unit of risk. SK Chemicals Co is currently generating about -0.08 per unit of volatility. If you would invest 2,330,000 in SK Chemicals Co on September 26, 2024 and sell it today you would lose (210,000) from holding SK Chemicals Co or give up 9.01% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Leaders Technology Investment vs. SK Chemicals Co
Performance |
Timeline |
Leaders Technology |
SK Chemicals |
Leaders Technology and SK Chemicals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Leaders Technology and SK Chemicals
The main advantage of trading using opposite Leaders Technology and SK Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leaders Technology position performs unexpectedly, SK Chemicals 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 SK Chemicals will offset losses from the drop in SK Chemicals' long position.Leaders Technology vs. KB Financial Group | Leaders Technology vs. Shinhan Financial Group | Leaders Technology vs. Hyundai Motor | Leaders Technology vs. Hyundai Motor Co |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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