Correlation Between Hwasung Industrial and Daiyang Metal
Can any of the company-specific risk be diversified away by investing in both Hwasung Industrial and Daiyang Metal 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 Hwasung Industrial and Daiyang Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hwasung Industrial Co and Daiyang Metal Co, you can compare the effects of market volatilities on Hwasung Industrial and Daiyang Metal 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 Hwasung Industrial with a short position of Daiyang Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwasung Industrial and Daiyang Metal.
Diversification Opportunities for Hwasung Industrial and Daiyang Metal
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hwasung and Daiyang is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hwasung Industrial Co and Daiyang Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiyang Metal and Hwasung Industrial 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 Hwasung Industrial Co are associated (or correlated) with Daiyang Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daiyang Metal has no effect on the direction of Hwasung Industrial i.e., Hwasung Industrial and Daiyang Metal go up and down completely randomly.
Pair Corralation between Hwasung Industrial and Daiyang Metal
Assuming the 90 days trading horizon Hwasung Industrial Co is expected to generate 0.49 times more return on investment than Daiyang Metal. However, Hwasung Industrial Co is 2.03 times less risky than Daiyang Metal. It trades about -0.07 of its potential returns per unit of risk. Daiyang Metal Co is currently generating about -0.06 per unit of risk. If you would invest 985,000 in Hwasung Industrial Co on November 5, 2024 and sell it today you would lose (16,000) from holding Hwasung Industrial Co or give up 1.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hwasung Industrial Co vs. Daiyang Metal Co
Performance |
| Timeline |
| Hwasung Industrial |
| Daiyang Metal |
Hwasung Industrial and Daiyang Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hwasung Industrial and Daiyang Metal
The main advantage of trading using opposite Hwasung Industrial and Daiyang Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hwasung Industrial position performs unexpectedly, Daiyang Metal 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 Daiyang Metal will offset losses from the drop in Daiyang Metal's long position.| Hwasung Industrial vs. Dong A Steel Technology | Hwasung Industrial vs. BIT Computer Co | Hwasung Industrial vs. Daishin Information Communications | Hwasung Industrial vs. Ssangyong Information Communication |
| Daiyang Metal vs. Jeju Air Co | Daiyang Metal vs. Clean Science co | Daiyang Metal vs. Moonbae Steel | Daiyang Metal vs. Samhyun Steel 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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