Correlation Between Hankook Furniture and Jeju Semiconductor
Can any of the company-specific risk be diversified away by investing in both Hankook Furniture and Jeju Semiconductor 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 Jeju Semiconductor 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 Jeju Semiconductor Corp, you can compare the effects of market volatilities on Hankook Furniture and Jeju Semiconductor 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 Jeju Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankook Furniture and Jeju Semiconductor.
Diversification Opportunities for Hankook Furniture and Jeju Semiconductor
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hankook and Jeju is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Furniture Co and Jeju Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Semiconductor Corp 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 Jeju Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Semiconductor Corp has no effect on the direction of Hankook Furniture i.e., Hankook Furniture and Jeju Semiconductor go up and down completely randomly.
Pair Corralation between Hankook Furniture and Jeju Semiconductor
Assuming the 90 days trading horizon Hankook Furniture Co is expected to generate 0.29 times more return on investment than Jeju Semiconductor. However, Hankook Furniture Co is 3.49 times less risky than Jeju Semiconductor. It trades about 0.02 of its potential returns per unit of risk. Jeju Semiconductor Corp is currently generating about 0.0 per unit of risk. If you would invest 387,962 in Hankook Furniture Co on September 4, 2024 and sell it today you would earn a total of 20,038 from holding Hankook Furniture Co or generate 5.16% 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. Jeju Semiconductor Corp
Performance |
| Timeline |
| Hankook Furniture |
| Jeju Semiconductor Corp |
Hankook Furniture and Jeju Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankook Furniture and Jeju Semiconductor
The main advantage of trading using opposite Hankook Furniture and Jeju Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankook Furniture position performs unexpectedly, Jeju Semiconductor 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 Jeju Semiconductor will offset losses from the drop in Jeju Semiconductor's long position.| Hankook Furniture vs. Samlip General Foods | Hankook Furniture vs. Seohee Construction Co | Hankook Furniture vs. Semyung Electric Machinery | Hankook Furniture vs. Daekyung Machinery Engineering |
| Jeju Semiconductor vs. Dongsin Engineering Construction | Jeju Semiconductor vs. Doosan Fuel Cell | Jeju Semiconductor vs. Daishin Balance 1 | Jeju Semiconductor vs. Total Soft 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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