Correlation Between Songwon Industrial and HMM
Can any of the company-specific risk be diversified away by investing in both Songwon Industrial and HMM 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 Songwon Industrial and HMM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Songwon Industrial Co and HMM Co, you can compare the effects of market volatilities on Songwon Industrial and HMM 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 Songwon Industrial with a short position of HMM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Songwon Industrial and HMM.
Diversification Opportunities for Songwon Industrial and HMM
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Songwon and HMM is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Songwon Industrial Co and HMM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMM Co and Songwon 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 Songwon Industrial Co are associated (or correlated) with HMM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMM Co has no effect on the direction of Songwon Industrial i.e., Songwon Industrial and HMM go up and down completely randomly.
Pair Corralation between Songwon Industrial and HMM
Assuming the 90 days trading horizon Songwon Industrial Co is expected to generate 0.8 times more return on investment than HMM. However, Songwon Industrial Co is 1.25 times less risky than HMM. It trades about 0.28 of its potential returns per unit of risk. HMM Co is currently generating about 0.08 per unit of risk. If you would invest 1,100,000 in Songwon Industrial Co on November 4, 2024 and sell it today you would earn a total of 140,000 from holding Songwon Industrial Co or generate 12.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Songwon Industrial Co vs. HMM Co
Performance |
| Timeline |
| Songwon Industrial |
| HMM Co |
Songwon Industrial and HMM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Songwon Industrial and HMM
The main advantage of trading using opposite Songwon Industrial and HMM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Songwon Industrial position performs unexpectedly, HMM 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 HMM will offset losses from the drop in HMM's long position.| Songwon Industrial vs. LG Household Healthcare | Songwon Industrial vs. Nable Communications | Songwon Industrial vs. Lotte Data Communication | Songwon Industrial vs. Sangsin Energy Display |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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