Correlation Between Hankook Furniture and HansBiomed
Can any of the company-specific risk be diversified away by investing in both Hankook Furniture and HansBiomed 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 HansBiomed 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 HansBiomed, you can compare the effects of market volatilities on Hankook Furniture and HansBiomed 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 HansBiomed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankook Furniture and HansBiomed.
Diversification Opportunities for Hankook Furniture and HansBiomed
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hankook and HansBiomed is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Furniture Co and HansBiomed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HansBiomed 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 HansBiomed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HansBiomed has no effect on the direction of Hankook Furniture i.e., Hankook Furniture and HansBiomed go up and down completely randomly.
Pair Corralation between Hankook Furniture and HansBiomed
Assuming the 90 days trading horizon Hankook Furniture Co is expected to generate 1.27 times more return on investment than HansBiomed. However, Hankook Furniture is 1.27 times more volatile than HansBiomed. It trades about 0.09 of its potential returns per unit of risk. HansBiomed is currently generating about -0.22 per unit of risk. If you would invest 401,500 in Hankook Furniture Co on November 29, 2024 and sell it today you would earn a total of 13,000 from holding Hankook Furniture Co or generate 3.24% 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. HansBiomed
Performance |
| Timeline |
| Hankook Furniture |
| HansBiomed |
Hankook Furniture and HansBiomed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankook Furniture and HansBiomed
The main advantage of trading using opposite Hankook Furniture and HansBiomed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankook Furniture position performs unexpectedly, HansBiomed 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 HansBiomed will offset losses from the drop in HansBiomed's long position.| Hankook Furniture vs. PJ Metal Co | Hankook Furniture vs. Shinhan Inverse Copper | Hankook Furniture vs. Kukil Metal Co | Hankook Furniture vs. Formetal Co |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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