Correlation Between Hwasung Industrial and InfoBank
Can any of the company-specific risk be diversified away by investing in both Hwasung Industrial and InfoBank 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 InfoBank 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 InfoBank, you can compare the effects of market volatilities on Hwasung Industrial and InfoBank 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 InfoBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwasung Industrial and InfoBank.
Diversification Opportunities for Hwasung Industrial and InfoBank
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hwasung and InfoBank is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Hwasung Industrial Co and InfoBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfoBank 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 InfoBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfoBank has no effect on the direction of Hwasung Industrial i.e., Hwasung Industrial and InfoBank go up and down completely randomly.
Pair Corralation between Hwasung Industrial and InfoBank
Assuming the 90 days trading horizon Hwasung Industrial Co is expected to generate 0.56 times more return on investment than InfoBank. However, Hwasung Industrial Co is 1.77 times less risky than InfoBank. It trades about -0.04 of its potential returns per unit of risk. InfoBank is currently generating about -0.08 per unit of risk. If you would invest 971,000 in Hwasung Industrial Co on October 28, 2024 and sell it today you would lose (10,000) from holding Hwasung Industrial Co or give up 1.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hwasung Industrial Co vs. InfoBank
Performance |
| Timeline |
| Hwasung Industrial |
| InfoBank |
Hwasung Industrial and InfoBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hwasung Industrial and InfoBank
The main advantage of trading using opposite Hwasung Industrial and InfoBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hwasung Industrial position performs unexpectedly, InfoBank 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 InfoBank will offset losses from the drop in InfoBank's long position.| Hwasung Industrial vs. KB Financial Group | Hwasung Industrial vs. Shinhan Financial Group | Hwasung Industrial vs. Hana Financial | Hwasung Industrial vs. Woori Financial Group |
| InfoBank vs. Samsung Electronics Co | InfoBank vs. Samsung Electronics Co | InfoBank vs. SK Hynix | InfoBank vs. HMM 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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