Correlation Between Hankook Furniture and Dream Security
Can any of the company-specific risk be diversified away by investing in both Hankook Furniture and Dream Security 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 Dream Security 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 Dream Security co, you can compare the effects of market volatilities on Hankook Furniture and Dream Security 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 Dream Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankook Furniture and Dream Security.
Diversification Opportunities for Hankook Furniture and Dream Security
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hankook and Dream is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Furniture Co and Dream Security co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Security co 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 Dream Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Security co has no effect on the direction of Hankook Furniture i.e., Hankook Furniture and Dream Security go up and down completely randomly.
Pair Corralation between Hankook Furniture and Dream Security
Assuming the 90 days trading horizon Hankook Furniture Co is expected to generate 0.16 times more return on investment than Dream Security. However, Hankook Furniture Co is 6.3 times less risky than Dream Security. It trades about -0.24 of its potential returns per unit of risk. Dream Security co is currently generating about -0.15 per unit of risk. If you would invest 406,500 in Hankook Furniture Co on November 7, 2024 and sell it today you would lose (12,000) from holding Hankook Furniture Co or give up 2.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hankook Furniture Co vs. Dream Security co
Performance |
| Timeline |
| Hankook Furniture |
| Dream Security co |
Hankook Furniture and Dream Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankook Furniture and Dream Security
The main advantage of trading using opposite Hankook Furniture and Dream Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankook Furniture position performs unexpectedly, Dream Security 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 Dream Security will offset losses from the drop in Dream Security's long position.| Hankook Furniture vs. FNSTech Co | Hankook Furniture vs. Ewon Comfortech Co | Hankook Furniture vs. Orbitech Co | Hankook Furniture vs. SS TECH |
| Dream Security vs. Songwon Industrial Co | Dream Security vs. Kukil Metal Co | Dream Security vs. Genie Music | Dream Security vs. Daelim Industrial 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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