Correlation Between Songwon Industrial and Handok Clean
Can any of the company-specific risk be diversified away by investing in both Songwon Industrial and Handok Clean 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 Handok Clean 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 Handok Clean Tech, you can compare the effects of market volatilities on Songwon Industrial and Handok Clean 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 Handok Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Songwon Industrial and Handok Clean.
Diversification Opportunities for Songwon Industrial and Handok Clean
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Songwon and Handok is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Songwon Industrial Co and Handok Clean Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Handok Clean Tech 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 Handok Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Handok Clean Tech has no effect on the direction of Songwon Industrial i.e., Songwon Industrial and Handok Clean go up and down completely randomly.
Pair Corralation between Songwon Industrial and Handok Clean
Assuming the 90 days trading horizon Songwon Industrial Co is expected to generate 2.2 times more return on investment than Handok Clean. However, Songwon Industrial is 2.2 times more volatile than Handok Clean Tech. It trades about 0.22 of its potential returns per unit of risk. Handok Clean Tech is currently generating about 0.46 per unit of risk. If you would invest 1,116,000 in Songwon Industrial Co on October 15, 2024 and sell it today you would earn a total of 115,000 from holding Songwon Industrial Co or generate 10.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Songwon Industrial Co vs. Handok Clean Tech
Performance |
| Timeline |
| Songwon Industrial |
| Handok Clean Tech |
Songwon Industrial and Handok Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Songwon Industrial and Handok Clean
The main advantage of trading using opposite Songwon Industrial and Handok Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Songwon Industrial position performs unexpectedly, Handok Clean 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 Handok Clean will offset losses from the drop in Handok Clean's long position.| Songwon Industrial vs. Sung Bo Chemicals | Songwon Industrial vs. Daewon Chemical Co | Songwon Industrial vs. Youngbo Chemical Co | Songwon Industrial vs. TK Chemical |
| Handok Clean vs. Hanjoo Light Metal | Handok Clean vs. Kbi Metal Co | Handok Clean vs. Daiyang Metal Co | Handok Clean vs. SungMoon Electronics Co |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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