Correlation Between Hwasung Industrial and Dongsin Engineering
Can any of the company-specific risk be diversified away by investing in both Hwasung Industrial and Dongsin Engineering 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 Dongsin Engineering 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 Dongsin Engineering Construction, you can compare the effects of market volatilities on Hwasung Industrial and Dongsin Engineering 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 Dongsin Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwasung Industrial and Dongsin Engineering.
Diversification Opportunities for Hwasung Industrial and Dongsin Engineering
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hwasung and Dongsin is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hwasung Industrial Co and Dongsin Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongsin Engineering 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 Dongsin Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongsin Engineering has no effect on the direction of Hwasung Industrial i.e., Hwasung Industrial and Dongsin Engineering go up and down completely randomly.
Pair Corralation between Hwasung Industrial and Dongsin Engineering
Assuming the 90 days trading horizon Hwasung Industrial Co is expected to generate 0.16 times more return on investment than Dongsin Engineering. However, Hwasung Industrial Co is 6.3 times less risky than Dongsin Engineering. It trades about 0.16 of its potential returns per unit of risk. Dongsin Engineering Construction is currently generating about 0.01 per unit of risk. If you would invest 926,299 in Hwasung Industrial Co on October 18, 2024 and sell it today you would earn a total of 39,701 from holding Hwasung Industrial Co or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hwasung Industrial Co vs. Dongsin Engineering Constructi
Performance |
| Timeline |
| Hwasung Industrial |
| Dongsin Engineering |
Hwasung Industrial and Dongsin Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hwasung Industrial and Dongsin Engineering
The main advantage of trading using opposite Hwasung Industrial and Dongsin Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hwasung Industrial position performs unexpectedly, Dongsin Engineering 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 Dongsin Engineering will offset losses from the drop in Dongsin Engineering's long position.| Hwasung Industrial vs. Kukdong Oil Chemicals | Hwasung Industrial vs. Hanil Chemical Ind | Hwasung Industrial vs. Youl Chon Chemical | Hwasung Industrial vs. Wonbang Tech Co |
| Dongsin Engineering vs. Hwasung Industrial Co | Dongsin Engineering vs. PJ Metal Co | Dongsin Engineering vs. Songwon Industrial Co | Dongsin Engineering vs. Lee Ku Industrial |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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