Correlation Between Heungkuk Metaltech and SBI Investment
Can any of the company-specific risk be diversified away by investing in both Heungkuk Metaltech and SBI Investment 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 Heungkuk Metaltech and SBI Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heungkuk Metaltech CoLtd and SBI Investment KOREA, you can compare the effects of market volatilities on Heungkuk Metaltech and SBI Investment 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 Heungkuk Metaltech with a short position of SBI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heungkuk Metaltech and SBI Investment.
Diversification Opportunities for Heungkuk Metaltech and SBI Investment
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Heungkuk and SBI is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Heungkuk Metaltech CoLtd and SBI Investment KOREA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Investment KOREA and Heungkuk Metaltech 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 Heungkuk Metaltech CoLtd are associated (or correlated) with SBI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Investment KOREA has no effect on the direction of Heungkuk Metaltech i.e., Heungkuk Metaltech and SBI Investment go up and down completely randomly.
Pair Corralation between Heungkuk Metaltech and SBI Investment
Assuming the 90 days trading horizon Heungkuk Metaltech CoLtd is expected to generate 0.66 times more return on investment than SBI Investment. However, Heungkuk Metaltech CoLtd is 1.52 times less risky than SBI Investment. It trades about -0.01 of its potential returns per unit of risk. SBI Investment KOREA is currently generating about -0.03 per unit of risk. If you would invest 610,711 in Heungkuk Metaltech CoLtd on October 31, 2024 and sell it today you would lose (91,711) from holding Heungkuk Metaltech CoLtd or give up 15.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heungkuk Metaltech CoLtd vs. SBI Investment KOREA
Performance |
| Timeline |
| Heungkuk Metaltech CoLtd |
| SBI Investment KOREA |
Heungkuk Metaltech and SBI Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heungkuk Metaltech and SBI Investment
The main advantage of trading using opposite Heungkuk Metaltech and SBI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heungkuk Metaltech position performs unexpectedly, SBI Investment 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 SBI Investment will offset losses from the drop in SBI Investment's long position.| Heungkuk Metaltech vs. Anam Electronics Co | Heungkuk Metaltech vs. Hyunwoo Industrial Co | Heungkuk Metaltech vs. Pyung Hwa Industrial | Heungkuk Metaltech vs. LG Electronics |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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