Correlation Between Hankook Furniture and Dgb Financial
Can any of the company-specific risk be diversified away by investing in both Hankook Furniture and Dgb Financial 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 Dgb Financial 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 Dgb Financial, you can compare the effects of market volatilities on Hankook Furniture and Dgb Financial 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 Dgb Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankook Furniture and Dgb Financial.
Diversification Opportunities for Hankook Furniture and Dgb Financial
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hankook and Dgb is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Furniture Co and Dgb Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dgb Financial 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 Dgb Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dgb Financial has no effect on the direction of Hankook Furniture i.e., Hankook Furniture and Dgb Financial go up and down completely randomly.
Pair Corralation between Hankook Furniture and Dgb Financial
Assuming the 90 days trading horizon Hankook Furniture Co is expected to generate 2.37 times more return on investment than Dgb Financial. However, Hankook Furniture is 2.37 times more volatile than Dgb Financial. It trades about 0.23 of its potential returns per unit of risk. Dgb Financial is currently generating about 0.45 per unit of risk. If you would invest 368,000 in Hankook Furniture Co on September 1, 2024 and sell it today you would earn a total of 37,500 from holding Hankook Furniture Co or generate 10.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hankook Furniture Co vs. Dgb Financial
Performance |
| Timeline |
| Hankook Furniture |
| Dgb Financial |
Hankook Furniture and Dgb Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankook Furniture and Dgb Financial
The main advantage of trading using opposite Hankook Furniture and Dgb Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankook Furniture position performs unexpectedly, Dgb Financial 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 Dgb Financial will offset losses from the drop in Dgb Financial's long position.| Hankook Furniture vs. LG Display | Hankook Furniture vs. Hyundai Motor | Hankook Furniture vs. Hyundai Motor Co | Hankook Furniture vs. Hyundai Motor Co |
| Dgb Financial vs. Dongbu Insurance Co | Dgb Financial vs. Kyung In Synthetic Corp | Dgb Financial vs. Pureun Mutual Savings | Dgb Financial vs. GS Retail 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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