Correlation Between Han Kook and Dongwon System
Can any of the company-specific risk be diversified away by investing in both Han Kook and Dongwon System 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 Han Kook and Dongwon System into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Han Kook Capital and Dongwon System, you can compare the effects of market volatilities on Han Kook and Dongwon System 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 Han Kook with a short position of Dongwon System. Check out your portfolio center. Please also check ongoing floating volatility patterns of Han Kook and Dongwon System.
Diversification Opportunities for Han Kook and Dongwon System
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Han and Dongwon is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Han Kook Capital and Dongwon System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwon System and Han Kook 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 Han Kook Capital are associated (or correlated) with Dongwon System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwon System has no effect on the direction of Han Kook i.e., Han Kook and Dongwon System go up and down completely randomly.
Pair Corralation between Han Kook and Dongwon System
Assuming the 90 days trading horizon Han Kook Capital is expected to generate 0.47 times more return on investment than Dongwon System. However, Han Kook Capital is 2.12 times less risky than Dongwon System. It trades about 0.03 of its potential returns per unit of risk. Dongwon System is currently generating about -0.02 per unit of risk. If you would invest 55,000 in Han Kook Capital on September 14, 2024 and sell it today you would earn a total of 400.00 from holding Han Kook Capital or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Han Kook Capital vs. Dongwon System
Performance |
| Timeline |
| Han Kook Capital |
| Dongwon System |
Han Kook and Dongwon System Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Han Kook and Dongwon System
The main advantage of trading using opposite Han Kook and Dongwon System positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Han Kook position performs unexpectedly, Dongwon System 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 Dongwon System will offset losses from the drop in Dongwon System's long position.| Han Kook vs. CG Hi Tech | Han Kook vs. Samlip General Foods | Han Kook vs. Sam Yang Foods | Han Kook vs. Korea Shipbuilding Offshore |
| Dongwon System vs. DSC Investment | Dongwon System vs. Jeju Air Co | Dongwon System vs. Woori Technology Investment | Dongwon System vs. CU Medical Systems |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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