Correlation Between HMM and Sewoon Medical
Can any of the company-specific risk be diversified away by investing in both HMM and Sewoon Medical 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 Sewoon Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMM Co and Sewoon Medical Co, you can compare the effects of market volatilities on HMM and Sewoon Medical 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 Sewoon Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMM and Sewoon Medical.
Diversification Opportunities for HMM and Sewoon Medical
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HMM and Sewoon is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding HMM Co and Sewoon Medical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sewoon Medical 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 Sewoon Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sewoon Medical has no effect on the direction of HMM i.e., HMM and Sewoon Medical go up and down completely randomly.
Pair Corralation between HMM and Sewoon Medical
Assuming the 90 days trading horizon HMM Co is expected to generate 1.83 times more return on investment than Sewoon Medical. However, HMM is 1.83 times more volatile than Sewoon Medical Co. It trades about 0.09 of its potential returns per unit of risk. Sewoon Medical Co is currently generating about -0.18 per unit of risk. If you would invest 1,712,000 in HMM Co on September 1, 2024 and sell it today you would earn a total of 84,000 from holding HMM Co or generate 4.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HMM Co vs. Sewoon Medical Co
Performance |
| Timeline |
| HMM Co |
| Sewoon Medical |
HMM and Sewoon Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMM and Sewoon Medical
The main advantage of trading using opposite HMM and Sewoon Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMM position performs unexpectedly, Sewoon Medical 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 Sewoon Medical will offset losses from the drop in Sewoon Medical's long position.The idea behind HMM Co and Sewoon Medical Co 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.| Sewoon Medical vs. Infinitt Healthcare Co | Sewoon Medical vs. PLAYWITH | Sewoon Medical vs. CKH Food Health | Sewoon Medical vs. Samhwa Paint 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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