Correlation Between Hankook Furniture and Daeduck Electronics
Can any of the company-specific risk be diversified away by investing in both Hankook Furniture and Daeduck Electronics 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 Daeduck Electronics 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 Daeduck Electronics Co, you can compare the effects of market volatilities on Hankook Furniture and Daeduck Electronics 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 Daeduck Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankook Furniture and Daeduck Electronics.
Diversification Opportunities for Hankook Furniture and Daeduck Electronics
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hankook and Daeduck is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Furniture Co and Daeduck Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daeduck Electronics 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 Daeduck Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daeduck Electronics has no effect on the direction of Hankook Furniture i.e., Hankook Furniture and Daeduck Electronics go up and down completely randomly.
Pair Corralation between Hankook Furniture and Daeduck Electronics
Assuming the 90 days trading horizon Hankook Furniture is expected to generate 7.42 times less return on investment than Daeduck Electronics. In addition to that, Hankook Furniture is 1.35 times more volatile than Daeduck Electronics Co. It trades about 0.02 of its total potential returns per unit of risk. Daeduck Electronics Co is currently generating about 0.2 per unit of volatility. If you would invest 661,000 in Daeduck Electronics Co on October 13, 2024 and sell it today you would earn a total of 18,000 from holding Daeduck Electronics Co or generate 2.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Hankook Furniture Co vs. Daeduck Electronics Co
Performance |
| Timeline |
| Hankook Furniture |
| Daeduck Electronics |
Hankook Furniture and Daeduck Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankook Furniture and Daeduck Electronics
The main advantage of trading using opposite Hankook Furniture and Daeduck Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankook Furniture position performs unexpectedly, Daeduck Electronics 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 Daeduck Electronics will offset losses from the drop in Daeduck Electronics' long position.| Hankook Furniture vs. Jeju Bank | Hankook Furniture vs. Dong A Steel Technology | Hankook Furniture vs. Digital Imaging Technology | Hankook Furniture vs. Industrial Bank |
| Daeduck Electronics vs. Ssangyong Information Communication | Daeduck Electronics vs. Duksan Hi Metal | Daeduck Electronics vs. PJ Metal Co | Daeduck Electronics vs. Kbi Metal 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |