Correlation Between Hankook Furniture and Nongshim
Can any of the company-specific risk be diversified away by investing in both Hankook Furniture and Nongshim 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 Nongshim 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 Nongshim, you can compare the effects of market volatilities on Hankook Furniture and Nongshim 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 Nongshim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankook Furniture and Nongshim.
Diversification Opportunities for Hankook Furniture and Nongshim
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hankook and Nongshim is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Furniture Co and Nongshim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nongshim 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 Nongshim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nongshim has no effect on the direction of Hankook Furniture i.e., Hankook Furniture and Nongshim go up and down completely randomly.
Pair Corralation between Hankook Furniture and Nongshim
Assuming the 90 days trading horizon Hankook Furniture Co is expected to generate 0.6 times more return on investment than Nongshim. However, Hankook Furniture Co is 1.66 times less risky than Nongshim. It trades about 0.01 of its potential returns per unit of risk. Nongshim is currently generating about -0.03 per unit of risk. If you would invest 399,447 in Hankook Furniture Co on September 12, 2024 and sell it today you would earn a total of 53.00 from holding Hankook Furniture Co or generate 0.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hankook Furniture Co vs. Nongshim
Performance |
| Timeline |
| Hankook Furniture |
| Nongshim |
Hankook Furniture and Nongshim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankook Furniture and Nongshim
The main advantage of trading using opposite Hankook Furniture and Nongshim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankook Furniture position performs unexpectedly, Nongshim 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 Nongshim will offset losses from the drop in Nongshim's long position.| Hankook Furniture vs. Daou Data Corp | Hankook Furniture vs. Solution Advanced Technology | Hankook Furniture vs. Busan Industrial Co | Hankook Furniture vs. Busan Ind |
| Nongshim vs. Hankook Furniture Co | Nongshim vs. Nam Hwa Construction | Nongshim vs. SEOJEON ELECTRIC MACHINERY | Nongshim vs. Dongbang Ship Machinery |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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