Correlation Between Hankook Furniture and Automobile
Can any of the company-specific risk be diversified away by investing in both Hankook Furniture and Automobile 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 Automobile 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 Automobile Pc, you can compare the effects of market volatilities on Hankook Furniture and Automobile 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 Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankook Furniture and Automobile.
Diversification Opportunities for Hankook Furniture and Automobile
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hankook and Automobile is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Furniture Co and Automobile Pc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automobile Pc 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 Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automobile Pc has no effect on the direction of Hankook Furniture i.e., Hankook Furniture and Automobile go up and down completely randomly.
Pair Corralation between Hankook Furniture and Automobile
Assuming the 90 days trading horizon Hankook Furniture Co is expected to generate 0.28 times more return on investment than Automobile. However, Hankook Furniture Co is 3.56 times less risky than Automobile. It trades about 0.1 of its potential returns per unit of risk. Automobile Pc is currently generating about -0.07 per unit of risk. If you would invest 398,500 in Hankook Furniture Co on October 30, 2024 and sell it today you would earn a total of 4,500 from holding Hankook Furniture Co or generate 1.13% 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. Automobile Pc
Performance |
| Timeline |
| Hankook Furniture |
| Automobile Pc |
Hankook Furniture and Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankook Furniture and Automobile
The main advantage of trading using opposite Hankook Furniture and Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankook Furniture position performs unexpectedly, Automobile 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 Automobile will offset losses from the drop in Automobile's 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 |
| Automobile vs. Hana Materials | Automobile vs. Hyosung Advanced Materials | Automobile vs. INNOX Advanced Materials | Automobile vs. Chorokbaem Healthcare 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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