Correlation Between Hanshin Construction and Dongwon Metal
Can any of the company-specific risk be diversified away by investing in both Hanshin Construction and Dongwon Metal 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 Dongwon Metal 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 Dongwon Metal Co, you can compare the effects of market volatilities on Hanshin Construction and Dongwon Metal 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 Dongwon Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanshin Construction and Dongwon Metal.
Diversification Opportunities for Hanshin Construction and Dongwon Metal
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hanshin and Dongwon is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hanshin Construction Co and Dongwon Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwon Metal 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 Dongwon Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwon Metal has no effect on the direction of Hanshin Construction i.e., Hanshin Construction and Dongwon Metal go up and down completely randomly.
Pair Corralation between Hanshin Construction and Dongwon Metal
Assuming the 90 days trading horizon Hanshin Construction Co is expected to generate 0.19 times more return on investment than Dongwon Metal. However, Hanshin Construction Co is 5.28 times less risky than Dongwon Metal. It trades about -0.1 of its potential returns per unit of risk. Dongwon Metal Co is currently generating about -0.3 per unit of risk. If you would invest 640,000 in Hanshin Construction Co on November 2, 2024 and sell it today you would lose (11,000) from holding Hanshin Construction Co or give up 1.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanshin Construction Co vs. Dongwon Metal Co
Performance |
| Timeline |
| Hanshin Construction |
| Dongwon Metal |
Hanshin Construction and Dongwon Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanshin Construction and Dongwon Metal
The main advantage of trading using opposite Hanshin Construction and Dongwon Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanshin Construction position performs unexpectedly, Dongwon Metal 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 Dongwon Metal will offset losses from the drop in Dongwon Metal's long position.| Hanshin Construction vs. Solution Advanced Technology | Hanshin Construction vs. Samlip General Foods | Hanshin Construction vs. Inzi Display CoLtd | Hanshin Construction vs. Digital Power Communications |
| Dongwon Metal vs. KB Financial Group | Dongwon Metal vs. Shinhan Financial Group | Dongwon Metal vs. Hana Financial | Dongwon Metal vs. Woori Financial Group |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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