Correlation Between Korean Drug and Hanwha InvestmentSecuri
Can any of the company-specific risk be diversified away by investing in both Korean Drug and Hanwha InvestmentSecuri 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 Korean Drug and Hanwha InvestmentSecuri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korean Drug Co and Hanwha InvestmentSecurities Co, you can compare the effects of market volatilities on Korean Drug and Hanwha InvestmentSecuri 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 Korean Drug with a short position of Hanwha InvestmentSecuri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Drug and Hanwha InvestmentSecuri.
Diversification Opportunities for Korean Drug and Hanwha InvestmentSecuri
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korean and Hanwha is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Korean Drug Co and Hanwha InvestmentSecurities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha InvestmentSecuri and Korean Drug 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 Korean Drug Co are associated (or correlated) with Hanwha InvestmentSecuri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha InvestmentSecuri has no effect on the direction of Korean Drug i.e., Korean Drug and Hanwha InvestmentSecuri go up and down completely randomly.
Pair Corralation between Korean Drug and Hanwha InvestmentSecuri
Assuming the 90 days trading horizon Korean Drug Co is expected to under-perform the Hanwha InvestmentSecuri. But the stock apears to be less risky and, when comparing its historical volatility, Korean Drug Co is 3.64 times less risky than Hanwha InvestmentSecuri. The stock trades about -0.15 of its potential returns per unit of risk. The Hanwha InvestmentSecurities Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 646,000 in Hanwha InvestmentSecurities Co on September 5, 2024 and sell it today you would earn a total of 104,000 from holding Hanwha InvestmentSecurities Co or generate 16.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Drug Co vs. Hanwha InvestmentSecurities Co
Performance |
| Timeline |
| Korean Drug |
| Hanwha InvestmentSecuri |
Korean Drug and Hanwha InvestmentSecuri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Drug and Hanwha InvestmentSecuri
The main advantage of trading using opposite Korean Drug and Hanwha InvestmentSecuri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Drug position performs unexpectedly, Hanwha InvestmentSecuri 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 Hanwha InvestmentSecuri will offset losses from the drop in Hanwha InvestmentSecuri's long position.| Korean Drug vs. HJ ShipBuilding Construction | Korean Drug vs. Nam Hwa Construction | Korean Drug vs. ENERGYMACHINERY KOREA CoLtd | Korean Drug vs. Semyung Electric Machinery |
| Hanwha InvestmentSecuri vs. Korean Drug Co | Hanwha InvestmentSecuri vs. Sangsin Energy Display | Hanwha InvestmentSecuri vs. CU Medical Systems | Hanwha InvestmentSecuri vs. Display Tech 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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