Correlation Between Ilji Technology and HS Valve
Can any of the company-specific risk be diversified away by investing in both Ilji Technology and HS Valve 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 Ilji Technology and HS Valve into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ilji Technology Co and HS Valve Co, you can compare the effects of market volatilities on Ilji Technology and HS Valve 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 Ilji Technology with a short position of HS Valve. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ilji Technology and HS Valve.
Diversification Opportunities for Ilji Technology and HS Valve
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ilji and 039610 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ilji Technology Co and HS Valve Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HS Valve and Ilji Technology 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 Ilji Technology Co are associated (or correlated) with HS Valve. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HS Valve has no effect on the direction of Ilji Technology i.e., Ilji Technology and HS Valve go up and down completely randomly.
Pair Corralation between Ilji Technology and HS Valve
Assuming the 90 days trading horizon Ilji Technology Co is expected to under-perform the HS Valve. But the stock apears to be less risky and, when comparing its historical volatility, Ilji Technology Co is 2.53 times less risky than HS Valve. The stock trades about -0.19 of its potential returns per unit of risk. The HS Valve Co is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 948,000 in HS Valve Co on September 1, 2024 and sell it today you would earn a total of 168,000 from holding HS Valve Co or generate 17.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ilji Technology Co vs. HS Valve Co
Performance |
| Timeline |
| Ilji Technology |
| HS Valve |
Ilji Technology and HS Valve Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ilji Technology and HS Valve
The main advantage of trading using opposite Ilji Technology and HS Valve positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ilji Technology position performs unexpectedly, HS Valve 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 HS Valve will offset losses from the drop in HS Valve's long position.| Ilji Technology vs. LG Display | Ilji Technology vs. Hyundai Motor | Ilji Technology vs. Hyundai Motor Co | Ilji Technology vs. Hyundai Motor Co |
| HS Valve vs. COWINTECH Co | HS Valve vs. Young Poong Precision | HS Valve vs. Seoam Machinery Industry | HS Valve vs. Haisung TPC 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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