Correlation Between Korea Shipbuilding and Hannong Chemicals
Can any of the company-specific risk be diversified away by investing in both Korea Shipbuilding and Hannong Chemicals 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 Korea Shipbuilding and Hannong Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Shipbuilding Offshore and Hannong Chemicals, you can compare the effects of market volatilities on Korea Shipbuilding and Hannong Chemicals 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 Korea Shipbuilding with a short position of Hannong Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Shipbuilding and Hannong Chemicals.
Diversification Opportunities for Korea Shipbuilding and Hannong Chemicals
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Hannong is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Korea Shipbuilding Offshore and Hannong Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannong Chemicals and Korea Shipbuilding 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 Korea Shipbuilding Offshore are associated (or correlated) with Hannong Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannong Chemicals has no effect on the direction of Korea Shipbuilding i.e., Korea Shipbuilding and Hannong Chemicals go up and down completely randomly.
Pair Corralation between Korea Shipbuilding and Hannong Chemicals
Assuming the 90 days trading horizon Korea Shipbuilding Offshore is expected to generate 0.88 times more return on investment than Hannong Chemicals. However, Korea Shipbuilding Offshore is 1.14 times less risky than Hannong Chemicals. It trades about 0.23 of its potential returns per unit of risk. Hannong Chemicals is currently generating about -0.3 per unit of risk. If you would invest 19,050,000 in Korea Shipbuilding Offshore on August 28, 2024 and sell it today you would earn a total of 2,600,000 from holding Korea Shipbuilding Offshore or generate 13.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Shipbuilding Offshore vs. Hannong Chemicals
Performance |
| Timeline |
| Korea Shipbuilding |
| Hannong Chemicals |
Korea Shipbuilding and Hannong Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Shipbuilding and Hannong Chemicals
The main advantage of trading using opposite Korea Shipbuilding and Hannong Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Shipbuilding position performs unexpectedly, Hannong Chemicals 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 Hannong Chemicals will offset losses from the drop in Hannong Chemicals' long position.| Korea Shipbuilding vs. Samsung Electronics Co | Korea Shipbuilding vs. Samsung Electronics Co | Korea Shipbuilding vs. Hyundai Motor Co | Korea Shipbuilding vs. Hyundai Motor |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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