Correlation Between Hwasung Industrial and ITM Semiconductor
Can any of the company-specific risk be diversified away by investing in both Hwasung Industrial and ITM Semiconductor 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 ITM Semiconductor 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 ITM Semiconductor Co, you can compare the effects of market volatilities on Hwasung Industrial and ITM Semiconductor 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 ITM Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwasung Industrial and ITM Semiconductor.
Diversification Opportunities for Hwasung Industrial and ITM Semiconductor
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hwasung and ITM is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Hwasung Industrial Co and ITM Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Semiconductor 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 ITM Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Semiconductor has no effect on the direction of Hwasung Industrial i.e., Hwasung Industrial and ITM Semiconductor go up and down completely randomly.
Pair Corralation between Hwasung Industrial and ITM Semiconductor
Assuming the 90 days trading horizon Hwasung Industrial Co is expected to under-perform the ITM Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Hwasung Industrial Co is 1.89 times less risky than ITM Semiconductor. The stock trades about -0.04 of its potential returns per unit of risk. The ITM Semiconductor Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,250,000 in ITM Semiconductor Co on October 28, 2024 and sell it today you would earn a total of 19,000 from holding ITM Semiconductor Co or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hwasung Industrial Co vs. ITM Semiconductor Co
Performance |
| Timeline |
| Hwasung Industrial |
| ITM Semiconductor |
Hwasung Industrial and ITM Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hwasung Industrial and ITM Semiconductor
The main advantage of trading using opposite Hwasung Industrial and ITM Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hwasung Industrial position performs unexpectedly, ITM Semiconductor 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 ITM Semiconductor will offset losses from the drop in ITM Semiconductor'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 |
| ITM Semiconductor vs. Woorim Machinery Co | ITM Semiconductor vs. Hyundai Engineering Construction | ITM Semiconductor vs. Hanshin Construction Co | ITM Semiconductor vs. SEOJEON ELECTRIC MACHINERY |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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