Correlation Between Korean Reinsurance and Hyosung Advanced
Can any of the company-specific risk be diversified away by investing in both Korean Reinsurance and Hyosung Advanced 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 Korean Reinsurance and Hyosung Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korean Reinsurance Co and Hyosung Advanced Materials, you can compare the effects of market volatilities on Korean Reinsurance and Hyosung Advanced 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 Korean Reinsurance with a short position of Hyosung Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Reinsurance and Hyosung Advanced.
Diversification Opportunities for Korean Reinsurance and Hyosung Advanced
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Korean and Hyosung is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Korean Reinsurance Co and Hyosung Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyosung Advanced Mat and Korean Reinsurance 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 Korean Reinsurance Co are associated (or correlated) with Hyosung Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyosung Advanced Mat has no effect on the direction of Korean Reinsurance i.e., Korean Reinsurance and Hyosung Advanced go up and down completely randomly.
Pair Corralation between Korean Reinsurance and Hyosung Advanced
Assuming the 90 days trading horizon Korean Reinsurance Co is expected to generate 0.34 times more return on investment than Hyosung Advanced. However, Korean Reinsurance Co is 2.94 times less risky than Hyosung Advanced. It trades about 0.12 of its potential returns per unit of risk. Hyosung Advanced Materials is currently generating about -0.57 per unit of risk. If you would invest 786,666 in Korean Reinsurance Co on September 1, 2024 and sell it today you would earn a total of 24,334 from holding Korean Reinsurance Co or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Reinsurance Co vs. Hyosung Advanced Materials
Performance |
| Timeline |
| Korean Reinsurance |
| Hyosung Advanced Mat |
Korean Reinsurance and Hyosung Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Reinsurance and Hyosung Advanced
The main advantage of trading using opposite Korean Reinsurance and Hyosung Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Reinsurance position performs unexpectedly, Hyosung Advanced 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 Hyosung Advanced will offset losses from the drop in Hyosung Advanced's long position.| Korean Reinsurance vs. SH Energy Chemical | Korean Reinsurance vs. Namhae Chemical | Korean Reinsurance vs. JC Chemical Co | Korean Reinsurance vs. Sung Bo Chemicals |
| Hyosung Advanced vs. Busan Industrial Co | Hyosung Advanced vs. Busan Ind | Hyosung Advanced vs. Mirae Asset Daewoo | Hyosung Advanced vs. Finebesteel |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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