Correlation Between Hankook Furniture and Daewon Media
Can any of the company-specific risk be diversified away by investing in both Hankook Furniture and Daewon Media 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 Daewon Media 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 Daewon Media Co, you can compare the effects of market volatilities on Hankook Furniture and Daewon Media 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 Daewon Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankook Furniture and Daewon Media.
Diversification Opportunities for Hankook Furniture and Daewon Media
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hankook and Daewon is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Furniture Co and Daewon Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewon Media 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 Daewon Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewon Media has no effect on the direction of Hankook Furniture i.e., Hankook Furniture and Daewon Media go up and down completely randomly.
Pair Corralation between Hankook Furniture and Daewon Media
Assuming the 90 days trading horizon Hankook Furniture Co is expected to generate 1.7 times more return on investment than Daewon Media. However, Hankook Furniture is 1.7 times more volatile than Daewon Media Co. It trades about 0.23 of its potential returns per unit of risk. Daewon Media Co is currently generating about -0.25 per unit of risk. If you would invest 369,500 in Hankook Furniture Co on August 25, 2024 and sell it today you would earn a total of 37,000 from holding Hankook Furniture Co or generate 10.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hankook Furniture Co vs. Daewon Media Co
Performance |
| Timeline |
| Hankook Furniture |
| Daewon Media |
Hankook Furniture and Daewon Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankook Furniture and Daewon Media
The main advantage of trading using opposite Hankook Furniture and Daewon Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankook Furniture position performs unexpectedly, Daewon Media 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 Daewon Media will offset losses from the drop in Daewon Media's long position.| Hankook Furniture vs. Busan Industrial Co | Hankook Furniture vs. Busan Ind | Hankook Furniture vs. Mirae Asset Daewoo | Hankook Furniture vs. UNISEM Co |
| Daewon Media vs. Hankook Furniture Co | Daewon Media vs. FoodNamoo | Daewon Media vs. FOODWELL Co | Daewon Media vs. CKH Food Health |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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