Correlation Between Hankook Furniture and Korea Electronic
Can any of the company-specific risk be diversified away by investing in both Hankook Furniture and Korea Electronic 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 Korea Electronic 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 Korea Electronic Certification, you can compare the effects of market volatilities on Hankook Furniture and Korea Electronic 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 Korea Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankook Furniture and Korea Electronic.
Diversification Opportunities for Hankook Furniture and Korea Electronic
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hankook and Korea is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Furniture Co and Korea Electronic Certification in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Electronic Cer 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 Korea Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Electronic Cer has no effect on the direction of Hankook Furniture i.e., Hankook Furniture and Korea Electronic go up and down completely randomly.
Pair Corralation between Hankook Furniture and Korea Electronic
Assuming the 90 days trading horizon Hankook Furniture is expected to generate 27.94 times less return on investment than Korea Electronic. But when comparing it to its historical volatility, Hankook Furniture Co is 1.72 times less risky than Korea Electronic. It trades about 0.02 of its potential returns per unit of risk. Korea Electronic Certification is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 281,224 in Korea Electronic Certification on October 13, 2024 and sell it today you would earn a total of 31,276 from holding Korea Electronic Certification or generate 11.12% 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. Korea Electronic Certification
Performance |
| Timeline |
| Hankook Furniture |
| Korea Electronic Cer |
Hankook Furniture and Korea Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankook Furniture and Korea Electronic
The main advantage of trading using opposite Hankook Furniture and Korea Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankook Furniture position performs unexpectedly, Korea Electronic 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 Korea Electronic will offset losses from the drop in Korea Electronic's 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 |
| Korea Electronic vs. Sangsin Energy Display | Korea Electronic vs. LG Display Co | Korea Electronic vs. Lotte Data Communication | Korea Electronic vs. Industrial Bank |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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