Correlation Between Seoul Food and Hanjoo Light
Can any of the company-specific risk be diversified away by investing in both Seoul Food and Hanjoo Light 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 Seoul Food and Hanjoo Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoul Food Industrial and Hanjoo Light Metal, you can compare the effects of market volatilities on Seoul Food and Hanjoo Light 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 Seoul Food with a short position of Hanjoo Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and Hanjoo Light.
Diversification Opportunities for Seoul Food and Hanjoo Light
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seoul and Hanjoo is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial and Hanjoo Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjoo Light Metal and Seoul Food 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 Seoul Food Industrial are associated (or correlated) with Hanjoo Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanjoo Light Metal has no effect on the direction of Seoul Food i.e., Seoul Food and Hanjoo Light go up and down completely randomly.
Pair Corralation between Seoul Food and Hanjoo Light
Assuming the 90 days trading horizon Seoul Food Industrial is expected to generate 0.77 times more return on investment than Hanjoo Light. However, Seoul Food Industrial is 1.3 times less risky than Hanjoo Light. It trades about -0.13 of its potential returns per unit of risk. Hanjoo Light Metal is currently generating about -0.36 per unit of risk. If you would invest 15,700 in Seoul Food Industrial on September 1, 2024 and sell it today you would lose (800.00) from holding Seoul Food Industrial or give up 5.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Food Industrial vs. Hanjoo Light Metal
Performance |
| Timeline |
| Seoul Food Industrial |
| Hanjoo Light Metal |
Seoul Food and Hanjoo Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Food and Hanjoo Light
The main advantage of trading using opposite Seoul Food and Hanjoo Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Food position performs unexpectedly, Hanjoo Light 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 Hanjoo Light will offset losses from the drop in Hanjoo Light's long position.| Seoul Food vs. SBI Investment KOREA | Seoul Food vs. E Investment Development | Seoul Food vs. SV Investment | Seoul Food vs. Daol Investment Securities |
| Hanjoo Light vs. Samsung Electronics Co | Hanjoo Light vs. Samsung Electronics Co | Hanjoo Light vs. LG Energy Solution | Hanjoo Light vs. SK Hynix |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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