Correlation Between Automobile and Hankook Furniture
Can any of the company-specific risk be diversified away by investing in both Automobile and Hankook Furniture 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 Automobile and Hankook Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automobile Pc and Hankook Furniture Co, you can compare the effects of market volatilities on Automobile and Hankook Furniture 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 Automobile with a short position of Hankook Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and Hankook Furniture.
Diversification Opportunities for Automobile and Hankook Furniture
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Automobile and Hankook is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and Hankook Furniture Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankook Furniture and Automobile 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 Automobile Pc are associated (or correlated) with Hankook Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankook Furniture has no effect on the direction of Automobile i.e., Automobile and Hankook Furniture go up and down completely randomly.
Pair Corralation between Automobile and Hankook Furniture
Assuming the 90 days trading horizon Automobile Pc is expected to under-perform the Hankook Furniture. In addition to that, Automobile is 2.21 times more volatile than Hankook Furniture Co. It trades about -0.08 of its total potential returns per unit of risk. Hankook Furniture Co is currently generating about 0.03 per unit of volatility. If you would invest 371,673 in Hankook Furniture Co on October 17, 2024 and sell it today you would earn a total of 26,327 from holding Hankook Furniture Co or generate 7.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automobile Pc vs. Hankook Furniture Co
Performance |
| Timeline |
| Automobile Pc |
| Hankook Furniture |
Automobile and Hankook Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automobile and Hankook Furniture
The main advantage of trading using opposite Automobile and Hankook Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile position performs unexpectedly, Hankook Furniture 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 Hankook Furniture will offset losses from the drop in Hankook Furniture's long position.| Automobile vs. BNK Financial Group | Automobile vs. Lotte Non Life Insurance | Automobile vs. Daesung Industrial Co | Automobile vs. Jb Financial |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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