Correlation Between Ssangyong Information and Hanshin Construction
Can any of the company-specific risk be diversified away by investing in both Ssangyong Information and Hanshin 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 Ssangyong Information and Hanshin Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ssangyong Information Communication and Hanshin Construction Co, you can compare the effects of market volatilities on Ssangyong Information and Hanshin 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 Ssangyong Information with a short position of Hanshin Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ssangyong Information and Hanshin Construction.
Diversification Opportunities for Ssangyong Information and Hanshin Construction
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ssangyong and Hanshin is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ssangyong Information Communic and Hanshin Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanshin Construction and Ssangyong Information 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 Ssangyong Information Communication are associated (or correlated) with Hanshin Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanshin Construction has no effect on the direction of Ssangyong Information i.e., Ssangyong Information and Hanshin Construction go up and down completely randomly.
Pair Corralation between Ssangyong Information and Hanshin Construction
Assuming the 90 days trading horizon Ssangyong Information Communication is expected to under-perform the Hanshin Construction. But the stock apears to be less risky and, when comparing its historical volatility, Ssangyong Information Communication is 1.16 times less risky than Hanshin Construction. The stock trades about -0.06 of its potential returns per unit of risk. The Hanshin Construction Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 791,631 in Hanshin Construction Co on August 28, 2024 and sell it today you would lose (90,631) from holding Hanshin Construction Co or give up 11.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ssangyong Information Communic vs. Hanshin Construction Co
Performance |
| Timeline |
| Ssangyong Information |
| Hanshin Construction |
Ssangyong Information and Hanshin Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ssangyong Information and Hanshin Construction
The main advantage of trading using opposite Ssangyong Information and Hanshin Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ssangyong Information position performs unexpectedly, Hanshin 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 Hanshin Construction will offset losses from the drop in Hanshin Construction's long position.| Ssangyong Information vs. Busan Industrial Co | Ssangyong Information vs. Busan Ind | Ssangyong Information vs. Mirae Asset Daewoo | Ssangyong Information vs. UNISEM Co |
| Hanshin Construction vs. Haesung Industrial Co | Hanshin Construction vs. Eagon Industrial Co | Hanshin Construction vs. Seoul Food Industrial | Hanshin Construction vs. Busan Industrial Co |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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