Correlation Between Choil Aluminum and Hankook Furniture
Can any of the company-specific risk be diversified away by investing in both Choil Aluminum 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 Choil Aluminum and Hankook Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Choil Aluminum and Hankook Furniture Co, you can compare the effects of market volatilities on Choil Aluminum 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 Choil Aluminum with a short position of Hankook Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choil Aluminum and Hankook Furniture.
Diversification Opportunities for Choil Aluminum and Hankook Furniture
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Choil and Hankook is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Choil Aluminum and Hankook Furniture Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankook Furniture and Choil Aluminum 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 Choil Aluminum 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 Choil Aluminum i.e., Choil Aluminum and Hankook Furniture go up and down completely randomly.
Pair Corralation between Choil Aluminum and Hankook Furniture
Assuming the 90 days trading horizon Choil Aluminum is expected to generate 1.63 times more return on investment than Hankook Furniture. However, Choil Aluminum is 1.63 times more volatile than Hankook Furniture Co. It trades about 0.38 of its potential returns per unit of risk. Hankook Furniture Co is currently generating about 0.1 per unit of risk. If you would invest 139,500 in Choil Aluminum on October 30, 2024 and sell it today you would earn a total of 10,300 from holding Choil Aluminum or generate 7.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choil Aluminum vs. Hankook Furniture Co
Performance |
| Timeline |
| Choil Aluminum |
| Hankook Furniture |
Choil Aluminum and Hankook Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choil Aluminum and Hankook Furniture
The main advantage of trading using opposite Choil Aluminum and Hankook Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choil Aluminum 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.| Choil Aluminum vs. Hotel Shilla Co | Choil Aluminum vs. Lotte Data Communication | Choil Aluminum vs. NICE Information Service | Choil Aluminum vs. Insung Information Co |
| Hankook Furniture vs. Samsung Electronics Co | Hankook Furniture vs. Samsung Electronics Co | Hankook Furniture vs. KB Financial Group | Hankook Furniture vs. Shinhan Financial Group |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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