Correlation Between Daishin Information and Hana Materials
Can any of the company-specific risk be diversified away by investing in both Daishin Information 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 Daishin Information and Hana Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daishin Information Communications and Hana Materials, you can compare the effects of market volatilities on Daishin Information 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 Daishin Information with a short position of Hana Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daishin Information and Hana Materials.
Diversification Opportunities for Daishin Information and Hana Materials
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daishin and Hana is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Daishin Information Communicat and Hana Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Materials and Daishin Information 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 Daishin Information Communications 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 Daishin Information i.e., Daishin Information and Hana Materials go up and down completely randomly.
Pair Corralation between Daishin Information and Hana Materials
Assuming the 90 days trading horizon Daishin Information Communications is expected to generate 0.44 times more return on investment than Hana Materials. However, Daishin Information Communications is 2.29 times less risky than Hana Materials. It trades about -0.12 of its potential returns per unit of risk. Hana Materials is currently generating about -0.17 per unit of risk. If you would invest 108,200 in Daishin Information Communications on September 2, 2024 and sell it today you would lose (22,300) from holding Daishin Information Communications or give up 20.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daishin Information Communicat vs. Hana Materials
Performance |
| Timeline |
| Daishin Information |
| Hana Materials |
Daishin Information and Hana Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daishin Information and Hana Materials
The main advantage of trading using opposite Daishin Information and Hana Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daishin Information 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.| Daishin Information vs. Busan Industrial Co | Daishin Information vs. Busan Ind | Daishin Information vs. Mirae Asset Daewoo | Daishin Information vs. Finebesteel |
| Hana Materials vs. Hyundai Home Shopping | Hana Materials vs. Miwon Chemicals Co | Hana Materials vs. Ssangyong Information Communication | Hana Materials vs. EV Advanced Material |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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