Correlation Between Hankook Furniture and KyungIn Electronics
Can any of the company-specific risk be diversified away by investing in both Hankook Furniture and KyungIn 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 KyungIn 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 KyungIn Electronics Co, you can compare the effects of market volatilities on Hankook Furniture and KyungIn 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 KyungIn Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankook Furniture and KyungIn Electronics.
Diversification Opportunities for Hankook Furniture and KyungIn Electronics
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hankook and KyungIn is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Furniture Co and KyungIn Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KyungIn 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 KyungIn Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KyungIn Electronics has no effect on the direction of Hankook Furniture i.e., Hankook Furniture and KyungIn Electronics go up and down completely randomly.
Pair Corralation between Hankook Furniture and KyungIn Electronics
Assuming the 90 days trading horizon Hankook Furniture Co is expected to generate 0.57 times more return on investment than KyungIn Electronics. However, Hankook Furniture Co is 1.76 times less risky than KyungIn Electronics. It trades about 0.04 of its potential returns per unit of risk. KyungIn Electronics Co is currently generating about -0.07 per unit of risk. If you would invest 393,517 in Hankook Furniture Co on October 26, 2024 and sell it today you would earn a total of 6,483 from holding Hankook Furniture Co or generate 1.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hankook Furniture Co vs. KyungIn Electronics Co
Performance |
| Timeline |
| Hankook Furniture |
| KyungIn Electronics |
Hankook Furniture and KyungIn Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankook Furniture and KyungIn Electronics
The main advantage of trading using opposite Hankook Furniture and KyungIn Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankook Furniture position performs unexpectedly, KyungIn 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 KyungIn Electronics will offset losses from the drop in KyungIn Electronics' long position.| Hankook Furniture vs. Samsung Electronics Co | Hankook Furniture vs. Samsung Electronics Co | Hankook Furniture vs. KB Financial Group | Hankook Furniture vs. Shinhan Financial Group |
| KyungIn Electronics vs. Hankook Furniture Co | KyungIn Electronics vs. BGF Retail Co | KyungIn Electronics vs. Nice Information Telecommunication | KyungIn Electronics vs. Digital Power Communications |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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