Correlation Between Hanshin Construction and Daelim Trading
Can any of the company-specific risk be diversified away by investing in both Hanshin Construction and Daelim Trading 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 Hanshin Construction and Daelim Trading into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanshin Construction Co and Daelim Trading Co, you can compare the effects of market volatilities on Hanshin Construction and Daelim Trading 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 Hanshin Construction with a short position of Daelim Trading. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanshin Construction and Daelim Trading.
Diversification Opportunities for Hanshin Construction and Daelim Trading
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanshin and Daelim is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hanshin Construction Co and Daelim Trading Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daelim Trading and Hanshin Construction 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 Hanshin Construction Co are associated (or correlated) with Daelim Trading. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daelim Trading has no effect on the direction of Hanshin Construction i.e., Hanshin Construction and Daelim Trading go up and down completely randomly.
Pair Corralation between Hanshin Construction and Daelim Trading
Assuming the 90 days trading horizon Hanshin Construction Co is expected to under-perform the Daelim Trading. But the stock apears to be less risky and, when comparing its historical volatility, Hanshin Construction Co is 1.42 times less risky than Daelim Trading. The stock trades about -0.08 of its potential returns per unit of risk. The Daelim Trading Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 260,500 in Daelim Trading Co on October 29, 2024 and sell it today you would lose (1,000.00) from holding Daelim Trading Co or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanshin Construction Co vs. Daelim Trading Co
Performance |
| Timeline |
| Hanshin Construction |
| Daelim Trading |
Hanshin Construction and Daelim Trading Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanshin Construction and Daelim Trading
The main advantage of trading using opposite Hanshin Construction and Daelim Trading positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanshin Construction position performs unexpectedly, Daelim Trading 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 Daelim Trading will offset losses from the drop in Daelim Trading's long position.| Hanshin Construction vs. GS Retail Co | Hanshin Construction vs. Insung Information Co | Hanshin Construction vs. Jeong Moon Information | Hanshin Construction vs. Koryo Credit Information |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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