Correlation Between Hwasung Industrial and Coloray International
Can any of the company-specific risk be diversified away by investing in both Hwasung Industrial and Coloray International 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 Coloray International 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 Coloray International Investment, you can compare the effects of market volatilities on Hwasung Industrial and Coloray International 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 Coloray International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwasung Industrial and Coloray International.
Diversification Opportunities for Hwasung Industrial and Coloray International
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hwasung and Coloray is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hwasung Industrial Co and Coloray International Investme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloray International 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 Coloray International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coloray International has no effect on the direction of Hwasung Industrial i.e., Hwasung Industrial and Coloray International go up and down completely randomly.
Pair Corralation between Hwasung Industrial and Coloray International
Assuming the 90 days trading horizon Hwasung Industrial Co is expected to under-perform the Coloray International. But the stock apears to be less risky and, when comparing its historical volatility, Hwasung Industrial Co is 1.75 times less risky than Coloray International. The stock trades about -0.16 of its potential returns per unit of risk. The Coloray International Investment is currently generating about 0.56 of returns per unit of risk over similar time horizon. If you would invest 61,400 in Coloray International Investment on November 7, 2024 and sell it today you would earn a total of 15,300 from holding Coloray International Investment or generate 24.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Hwasung Industrial Co vs. Coloray International Investme
Performance |
| Timeline |
| Hwasung Industrial |
| Coloray International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Hwasung Industrial and Coloray International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hwasung Industrial and Coloray International
The main advantage of trading using opposite Hwasung Industrial and Coloray International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hwasung Industrial position performs unexpectedly, Coloray International 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 Coloray International will offset losses from the drop in Coloray International's long position.| Hwasung Industrial vs. Daewoo SBI SPAC | Hwasung Industrial vs. Jahwa Electron | Hwasung Industrial vs. Wonbang Tech Co |
| Coloray International vs. Settlebank | Coloray International vs. Hankukpackage Co | Coloray International vs. Narae Nanotech Corp | Coloray International vs. FNSTech 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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