Correlation Between Hankook Furniture and FoodNamoo
Can any of the company-specific risk be diversified away by investing in both Hankook Furniture and FoodNamoo 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 FoodNamoo 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 FoodNamoo, you can compare the effects of market volatilities on Hankook Furniture and FoodNamoo 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 FoodNamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankook Furniture and FoodNamoo.
Diversification Opportunities for Hankook Furniture and FoodNamoo
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hankook and FoodNamoo is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Furniture Co and FoodNamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FoodNamoo 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 FoodNamoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FoodNamoo has no effect on the direction of Hankook Furniture i.e., Hankook Furniture and FoodNamoo go up and down completely randomly.
Pair Corralation between Hankook Furniture and FoodNamoo
Assuming the 90 days trading horizon Hankook Furniture Co is expected to generate 0.45 times more return on investment than FoodNamoo. However, Hankook Furniture Co is 2.21 times less risky than FoodNamoo. It trades about 0.02 of its potential returns per unit of risk. FoodNamoo is currently generating about -0.4 per unit of risk. If you would invest 399,311 in Hankook Furniture Co on October 13, 2024 and sell it today you would earn a total of 1,189 from holding Hankook Furniture Co or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Hankook Furniture Co vs. FoodNamoo
Performance |
| Timeline |
| Hankook Furniture |
| FoodNamoo |
Hankook Furniture and FoodNamoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankook Furniture and FoodNamoo
The main advantage of trading using opposite Hankook Furniture and FoodNamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankook Furniture position performs unexpectedly, FoodNamoo 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 FoodNamoo will offset losses from the drop in FoodNamoo's long position.| Hankook Furniture vs. Jeju Bank | Hankook Furniture vs. Dong A Steel Technology | Hankook Furniture vs. Digital Imaging Technology | Hankook Furniture vs. Industrial Bank |
| FoodNamoo vs. Heungkuk Metaltech CoLtd | FoodNamoo vs. LG Household Healthcare | FoodNamoo vs. Air Busan Co | FoodNamoo vs. Youngsin Metal Industrial |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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