Correlation Between HMM and ChipsMedia
Can any of the company-specific risk be diversified away by investing in both HMM and ChipsMedia 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 ChipsMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMM Co and ChipsMedia, you can compare the effects of market volatilities on HMM and ChipsMedia 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 ChipsMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMM and ChipsMedia.
Diversification Opportunities for HMM and ChipsMedia
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between HMM and ChipsMedia is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding HMM Co and ChipsMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChipsMedia 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 ChipsMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChipsMedia has no effect on the direction of HMM i.e., HMM and ChipsMedia go up and down completely randomly.
Pair Corralation between HMM and ChipsMedia
Assuming the 90 days trading horizon HMM Co is expected to generate 0.67 times more return on investment than ChipsMedia. However, HMM Co is 1.49 times less risky than ChipsMedia. It trades about 0.02 of its potential returns per unit of risk. ChipsMedia is currently generating about -0.03 per unit of risk. If you would invest 1,782,000 in HMM Co on November 5, 2024 and sell it today you would earn a total of 122,000 from holding HMM Co or generate 6.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HMM Co vs. ChipsMedia
Performance |
| Timeline |
| HMM Co |
| ChipsMedia |
HMM and ChipsMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMM and ChipsMedia
The main advantage of trading using opposite HMM and ChipsMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMM position performs unexpectedly, ChipsMedia 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 ChipsMedia will offset losses from the drop in ChipsMedia's long position.The idea behind HMM Co and ChipsMedia 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.| ChipsMedia vs. Shinhan Financial Group | ChipsMedia vs. DB Insurance Co | ChipsMedia vs. Daejung Chemicals Metals | ChipsMedia vs. Kukdo Chemical 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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