Correlation Between Keyang Electric and Hana Materials
Can any of the company-specific risk be diversified away by investing in both Keyang Electric and Hana Materials 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 Keyang Electric and Hana Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keyang Electric Machinery and Hana Materials, you can compare the effects of market volatilities on Keyang Electric and Hana Materials 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 Keyang Electric with a short position of Hana Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keyang Electric and Hana Materials.
Diversification Opportunities for Keyang Electric and Hana Materials
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Keyang and Hana is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Keyang Electric Machinery and Hana Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Materials and Keyang Electric 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 Keyang Electric Machinery are associated (or correlated) with Hana Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Materials has no effect on the direction of Keyang Electric i.e., Keyang Electric and Hana Materials go up and down completely randomly.
Pair Corralation between Keyang Electric and Hana Materials
Assuming the 90 days trading horizon Keyang Electric Machinery is expected to generate 0.71 times more return on investment than Hana Materials. However, Keyang Electric Machinery is 1.41 times less risky than Hana Materials. It trades about 0.37 of its potential returns per unit of risk. Hana Materials is currently generating about 0.16 per unit of risk. If you would invest 342,000 in Keyang Electric Machinery on October 14, 2024 and sell it today you would earn a total of 67,000 from holding Keyang Electric Machinery or generate 19.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keyang Electric Machinery vs. Hana Materials
Performance |
| Timeline |
| Keyang Electric Machinery |
| Hana Materials |
Keyang Electric and Hana Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keyang Electric and Hana Materials
The main advantage of trading using opposite Keyang Electric and Hana Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keyang Electric position performs unexpectedly, Hana Materials 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 Hana Materials will offset losses from the drop in Hana Materials' long position.| Keyang Electric vs. Samyung Trading Co | Keyang Electric vs. Coloray International Investment | Keyang Electric vs. Korea Investment Holdings | Keyang Electric vs. E Investment Development |
| Hana Materials vs. Daishin Information Communications | Hana Materials vs. Keyang Electric Machinery | Hana Materials vs. Woorim Machinery Co | Hana Materials vs. Camus Engineering Construction |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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