Correlation Between Sung Bo and Han Kook
Can any of the company-specific risk be diversified away by investing in both Sung Bo and Han Kook 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 Sung Bo and Han Kook into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sung Bo Chemicals and Han Kook Steel, you can compare the effects of market volatilities on Sung Bo and Han Kook 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 Sung Bo with a short position of Han Kook. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sung Bo and Han Kook.
Diversification Opportunities for Sung Bo and Han Kook
Good diversification
The 3 months correlation between Sung and Han is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sung Bo Chemicals and Han Kook Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Han Kook Steel and Sung Bo 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 Sung Bo Chemicals are associated (or correlated) with Han Kook. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Han Kook Steel has no effect on the direction of Sung Bo i.e., Sung Bo and Han Kook go up and down completely randomly.
Pair Corralation between Sung Bo and Han Kook
Assuming the 90 days trading horizon Sung Bo Chemicals is expected to generate 0.51 times more return on investment than Han Kook. However, Sung Bo Chemicals is 1.98 times less risky than Han Kook. It trades about 0.0 of its potential returns per unit of risk. Han Kook Steel is currently generating about -0.03 per unit of risk. If you would invest 281,216 in Sung Bo Chemicals on October 14, 2024 and sell it today you would lose (25,716) from holding Sung Bo Chemicals or give up 9.14% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Sung Bo Chemicals vs. Han Kook Steel
Performance |
Timeline |
Sung Bo Chemicals |
Han Kook Steel |
Sung Bo and Han Kook Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sung Bo and Han Kook
The main advantage of trading using opposite Sung Bo and Han Kook positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sung Bo position performs unexpectedly, Han Kook 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 Han Kook will offset losses from the drop in Han Kook's long position.Sung Bo vs. Lotte Chilsung Beverage | Sung Bo vs. Pyung Hwa Industrial | Sung Bo vs. Echomarketing CoLtd | Sung Bo vs. GS Retail Co |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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