Correlation Between Nongshim and Hankook Furniture
Can any of the company-specific risk be diversified away by investing in both Nongshim and Hankook Furniture 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 Nongshim and Hankook Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nongshim and Hankook Furniture Co, you can compare the effects of market volatilities on Nongshim and Hankook Furniture 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 Nongshim with a short position of Hankook Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nongshim and Hankook Furniture.
Diversification Opportunities for Nongshim and Hankook Furniture
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nongshim and Hankook is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nongshim and Hankook Furniture Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankook Furniture and Nongshim 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 Nongshim are associated (or correlated) with Hankook Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankook Furniture has no effect on the direction of Nongshim i.e., Nongshim and Hankook Furniture go up and down completely randomly.
Pair Corralation between Nongshim and Hankook Furniture
Assuming the 90 days trading horizon Nongshim is expected to generate 1.63 times more return on investment than Hankook Furniture. However, Nongshim is 1.63 times more volatile than Hankook Furniture Co. It trades about 0.01 of its potential returns per unit of risk. Hankook Furniture Co is currently generating about 0.0 per unit of risk. If you would invest 34,135,100 in Nongshim on September 12, 2024 and sell it today you would earn a total of 364,900 from holding Nongshim or generate 1.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nongshim vs. Hankook Furniture Co
Performance |
| Timeline |
| Nongshim |
| Hankook Furniture |
Nongshim and Hankook Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nongshim and Hankook Furniture
The main advantage of trading using opposite Nongshim and Hankook Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nongshim position performs unexpectedly, Hankook Furniture 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 Hankook Furniture will offset losses from the drop in Hankook Furniture's long position.| Nongshim vs. Hankook Furniture Co | Nongshim vs. Nam Hwa Construction | Nongshim vs. SEOJEON ELECTRIC MACHINERY | Nongshim vs. Dongbang Ship Machinery |
| Hankook Furniture vs. Daou Data Corp | Hankook Furniture vs. Solution Advanced Technology | Hankook Furniture vs. Busan Industrial Co | Hankook Furniture vs. Busan Ind |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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