Correlation Between Hankook Furniture and KakaoBank Corp
Can any of the company-specific risk be diversified away by investing in both Hankook Furniture and KakaoBank Corp 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 KakaoBank Corp 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 KakaoBank Corp, you can compare the effects of market volatilities on Hankook Furniture and KakaoBank Corp 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 KakaoBank Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankook Furniture and KakaoBank Corp.
Diversification Opportunities for Hankook Furniture and KakaoBank Corp
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hankook and KakaoBank is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Furniture Co and KakaoBank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KakaoBank 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 KakaoBank Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KakaoBank Corp has no effect on the direction of Hankook Furniture i.e., Hankook Furniture and KakaoBank Corp go up and down completely randomly.
Pair Corralation between Hankook Furniture and KakaoBank Corp
Assuming the 90 days trading horizon Hankook Furniture Co is expected to generate 0.49 times more return on investment than KakaoBank Corp. However, Hankook Furniture Co is 2.04 times less risky than KakaoBank Corp. It trades about -0.01 of its potential returns per unit of risk. KakaoBank Corp is currently generating about 0.0 per unit of risk. If you would invest 433,604 in Hankook Furniture Co on September 1, 2024 and sell it today you would lose (28,104) from holding Hankook Furniture Co or give up 6.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hankook Furniture Co vs. KakaoBank Corp
Performance |
| Timeline |
| Hankook Furniture |
| KakaoBank Corp |
Hankook Furniture and KakaoBank Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankook Furniture and KakaoBank Corp
The main advantage of trading using opposite Hankook Furniture and KakaoBank Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankook Furniture position performs unexpectedly, KakaoBank Corp 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 KakaoBank Corp will offset losses from the drop in KakaoBank Corp'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 |
| KakaoBank Corp vs. Shinhan Financial Group | KakaoBank Corp vs. Hana Financial | KakaoBank Corp vs. Woori Financial Group | KakaoBank Corp vs. Industrial 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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