Correlation Between HMM and Eugene Technology
Can any of the company-specific risk be diversified away by investing in both HMM and Eugene Technology 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 HMM and Eugene Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMM Co and Eugene Technology CoLtd, you can compare the effects of market volatilities on HMM and Eugene Technology 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 HMM with a short position of Eugene Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMM and Eugene Technology.
Diversification Opportunities for HMM and Eugene Technology
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between HMM and Eugene is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding HMM Co and Eugene Technology CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eugene Technology CoLtd and HMM 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 HMM Co are associated (or correlated) with Eugene Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eugene Technology CoLtd has no effect on the direction of HMM i.e., HMM and Eugene Technology go up and down completely randomly.
Pair Corralation between HMM and Eugene Technology
Assuming the 90 days trading horizon HMM is expected to generate 3.19 times less return on investment than Eugene Technology. But when comparing it to its historical volatility, HMM Co is 1.17 times less risky than Eugene Technology. It trades about 0.08 of its potential returns per unit of risk. Eugene Technology CoLtd is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,245,000 in Eugene Technology CoLtd on November 4, 2024 and sell it today you would earn a total of 445,000 from holding Eugene Technology CoLtd or generate 13.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HMM Co vs. Eugene Technology CoLtd
Performance |
| Timeline |
| HMM Co |
| Eugene Technology CoLtd |
HMM and Eugene Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMM and Eugene Technology
The main advantage of trading using opposite HMM and Eugene Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMM position performs unexpectedly, Eugene Technology 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 Eugene Technology will offset losses from the drop in Eugene Technology's long position.The idea behind HMM Co and Eugene Technology CoLtd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Eugene Technology vs. Hankook Furniture Co | Eugene Technology vs. Tae Kyung Chemical | Eugene Technology vs. Daejung Chemicals Metals | Eugene Technology vs. Pyung Hwa Industrial |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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