Correlation Between Hanshin Construction and Microfriend
Can any of the company-specific risk be diversified away by investing in both Hanshin Construction and Microfriend 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 Microfriend 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 Microfriend, you can compare the effects of market volatilities on Hanshin Construction and Microfriend 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 Microfriend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanshin Construction and Microfriend.
Diversification Opportunities for Hanshin Construction and Microfriend
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hanshin and Microfriend is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Hanshin Construction Co and Microfriend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microfriend 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 Microfriend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microfriend has no effect on the direction of Hanshin Construction i.e., Hanshin Construction and Microfriend go up and down completely randomly.
Pair Corralation between Hanshin Construction and Microfriend
Assuming the 90 days trading horizon Hanshin Construction Co is expected to generate 0.51 times more return on investment than Microfriend. However, Hanshin Construction Co is 1.97 times less risky than Microfriend. It trades about -0.02 of its potential returns per unit of risk. Microfriend is currently generating about -0.01 per unit of risk. If you would invest 890,345 in Hanshin Construction Co on September 1, 2024 and sell it today you would lose (201,345) from holding Hanshin Construction Co or give up 22.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanshin Construction Co vs. Microfriend
Performance |
| Timeline |
| Hanshin Construction |
| Microfriend |
Hanshin Construction and Microfriend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanshin Construction and Microfriend
The main advantage of trading using opposite Hanshin Construction and Microfriend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanshin Construction position performs unexpectedly, Microfriend 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 Microfriend will offset losses from the drop in Microfriend's long position.| Hanshin Construction vs. AptaBio Therapeutics | Hanshin Construction vs. Daewoo SBI SPAC | Hanshin Construction vs. Dream Security co | Hanshin Construction vs. Microfriend |
| Microfriend vs. SK Hynix | Microfriend vs. LX Semicon Co | Microfriend vs. Tokai Carbon Korea | Microfriend vs. People Technology |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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