Correlation Between Bohae Brewery and Hankook Furniture
Can any of the company-specific risk be diversified away by investing in both Bohae Brewery and Hankook Furniture 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 Bohae Brewery and Hankook Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bohae Brewery and Hankook Furniture Co, you can compare the effects of market volatilities on Bohae Brewery and Hankook Furniture 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 Bohae Brewery with a short position of Hankook Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bohae Brewery and Hankook Furniture.
Diversification Opportunities for Bohae Brewery and Hankook Furniture
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bohae and Hankook is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bohae Brewery and Hankook Furniture Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankook Furniture and Bohae Brewery 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 Bohae Brewery are associated (or correlated) with Hankook Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankook Furniture has no effect on the direction of Bohae Brewery i.e., Bohae Brewery and Hankook Furniture go up and down completely randomly.
Pair Corralation between Bohae Brewery and Hankook Furniture
Assuming the 90 days trading horizon Bohae Brewery is expected to under-perform the Hankook Furniture. In addition to that, Bohae Brewery is 1.84 times more volatile than Hankook Furniture Co. It trades about -0.03 of its total potential returns per unit of risk. Hankook Furniture Co is currently generating about 0.02 per unit of volatility. If you would invest 387,962 in Hankook Furniture Co on September 4, 2024 and sell it today you would earn a total of 20,038 from holding Hankook Furniture Co or generate 5.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bohae Brewery vs. Hankook Furniture Co
Performance |
| Timeline |
| Bohae Brewery |
| Hankook Furniture |
Bohae Brewery and Hankook Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bohae Brewery and Hankook Furniture
The main advantage of trading using opposite Bohae Brewery and Hankook Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bohae Brewery position performs unexpectedly, Hankook Furniture 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 Hankook Furniture will offset losses from the drop in Hankook Furniture's long position.| Bohae Brewery vs. LG Display | Bohae Brewery vs. Hyundai Motor | Bohae Brewery vs. Hyundai Motor Co | Bohae Brewery vs. Hyundai Motor Co |
| Hankook Furniture vs. Samlip General Foods | Hankook Furniture vs. Seohee Construction Co | Hankook Furniture vs. Semyung Electric Machinery | Hankook Furniture vs. Daekyung Machinery Engineering |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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