Correlation Between Hankook Furniture and Bohae Brewery
Can any of the company-specific risk be diversified away by investing in both Hankook Furniture and Bohae Brewery 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 Hankook Furniture and Bohae Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hankook Furniture Co and Bohae Brewery, you can compare the effects of market volatilities on Hankook Furniture and Bohae Brewery 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 Hankook Furniture with a short position of Bohae Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankook Furniture and Bohae Brewery.
Diversification Opportunities for Hankook Furniture and Bohae Brewery
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hankook and Bohae is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Furniture Co and Bohae Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bohae Brewery and Hankook Furniture 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 Hankook Furniture Co are associated (or correlated) with Bohae Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bohae Brewery has no effect on the direction of Hankook Furniture i.e., Hankook Furniture and Bohae Brewery go up and down completely randomly.
Pair Corralation between Hankook Furniture and Bohae Brewery
Assuming the 90 days trading horizon Hankook Furniture Co is expected to generate 0.54 times more return on investment than Bohae Brewery. However, Hankook Furniture Co is 1.84 times less risky than Bohae Brewery. It trades about 0.02 of its potential returns per unit of risk. Bohae Brewery is currently generating about -0.03 per unit of risk. If you would invest 387,962 in Hankook Furniture Co on September 4, 2024 and sell it today you would earn a total of 20,038 from holding Hankook Furniture Co or generate 5.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hankook Furniture Co vs. Bohae Brewery
Performance |
| Timeline |
| Hankook Furniture |
| Bohae Brewery |
Hankook Furniture and Bohae Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankook Furniture and Bohae Brewery
The main advantage of trading using opposite Hankook Furniture and Bohae Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankook Furniture position performs unexpectedly, Bohae Brewery 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 Bohae Brewery will offset losses from the drop in Bohae Brewery's long position.| Hankook Furniture vs. Samlip General Foods | Hankook Furniture vs. Seohee Construction Co | Hankook Furniture vs. Semyung Electric Machinery | Hankook Furniture vs. Daekyung Machinery Engineering |
| Bohae Brewery vs. LG Display | Bohae Brewery vs. Hyundai Motor | Bohae Brewery vs. Hyundai Motor Co | Bohae Brewery vs. Hyundai Motor 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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