Correlation Between Songwon Industrial and Hyunwoo Industrial
Can any of the company-specific risk be diversified away by investing in both Songwon Industrial and Hyunwoo Industrial 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 Hyunwoo Industrial 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 Hyunwoo Industrial Co, you can compare the effects of market volatilities on Songwon Industrial and Hyunwoo Industrial 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 Hyunwoo Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Songwon Industrial and Hyunwoo Industrial.
Diversification Opportunities for Songwon Industrial and Hyunwoo Industrial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Songwon and Hyunwoo is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Songwon Industrial Co and Hyunwoo Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyunwoo Industrial 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 Hyunwoo Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyunwoo Industrial has no effect on the direction of Songwon Industrial i.e., Songwon Industrial and Hyunwoo Industrial go up and down completely randomly.
Pair Corralation between Songwon Industrial and Hyunwoo Industrial
Assuming the 90 days trading horizon Songwon Industrial Co is expected to generate 1.38 times more return on investment than Hyunwoo Industrial. However, Songwon Industrial is 1.38 times more volatile than Hyunwoo Industrial Co. It trades about 0.24 of its potential returns per unit of risk. Hyunwoo Industrial Co is currently generating about 0.05 per unit of risk. If you would invest 1,119,000 in Songwon Industrial Co on October 31, 2024 and sell it today you would earn a total of 132,000 from holding Songwon Industrial Co or generate 11.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Songwon Industrial Co vs. Hyunwoo Industrial Co
Performance |
| Timeline |
| Songwon Industrial |
| Hyunwoo Industrial |
Songwon Industrial and Hyunwoo Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Songwon Industrial and Hyunwoo Industrial
The main advantage of trading using opposite Songwon Industrial and Hyunwoo Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Songwon Industrial position performs unexpectedly, Hyunwoo Industrial 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 Hyunwoo Industrial will offset losses from the drop in Hyunwoo Industrial's long position.| Songwon Industrial vs. Daewon Media Co | Songwon Industrial vs. Daishin Information Communications | Songwon Industrial vs. Next Entertainment World | Songwon Industrial vs. MEDIANA CoLtd |
| Hyunwoo Industrial vs. Atinum Investment Co | Hyunwoo Industrial vs. NICE Information Service | Hyunwoo Industrial vs. Nh Investment And | Hyunwoo Industrial vs. Korea Shipbuilding Offshore |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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