Correlation Between Hanshin Construction and Seohee Construction
Can any of the company-specific risk be diversified away by investing in both Hanshin Construction and Seohee Construction 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 Seohee Construction 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 Seohee Construction Co, you can compare the effects of market volatilities on Hanshin Construction and Seohee Construction 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 Seohee Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanshin Construction and Seohee Construction.
Diversification Opportunities for Hanshin Construction and Seohee Construction
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hanshin and Seohee is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Hanshin Construction Co and Seohee Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seohee Construction 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 Seohee Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seohee Construction has no effect on the direction of Hanshin Construction i.e., Hanshin Construction and Seohee Construction go up and down completely randomly.
Pair Corralation between Hanshin Construction and Seohee Construction
Assuming the 90 days trading horizon Hanshin Construction Co is expected to under-perform the Seohee Construction. In addition to that, Hanshin Construction is 1.17 times more volatile than Seohee Construction Co. It trades about -0.02 of its total potential returns per unit of risk. Seohee Construction Co is currently generating about 0.03 per unit of volatility. If you would invest 115,666 in Seohee Construction Co on August 29, 2024 and sell it today you would earn a total of 25,834 from holding Seohee Construction Co or generate 22.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanshin Construction Co vs. Seohee Construction Co
Performance |
| Timeline |
| Hanshin Construction |
| Seohee Construction |
Hanshin Construction and Seohee Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanshin Construction and Seohee Construction
The main advantage of trading using opposite Hanshin Construction and Seohee Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanshin Construction position performs unexpectedly, Seohee Construction 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 Seohee Construction will offset losses from the drop in Seohee Construction's long position.| Hanshin Construction vs. Haesung Industrial Co | Hanshin Construction vs. Eagon Industrial Co | Hanshin Construction vs. Seoul Food Industrial | Hanshin Construction vs. Busan Industrial Co |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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