Correlation Between Han Kook and Dreamus
Can any of the company-specific risk be diversified away by investing in both Han Kook and Dreamus 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 Dreamus 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 Dreamus Company, you can compare the effects of market volatilities on Han Kook and Dreamus 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 Dreamus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Han Kook and Dreamus.
Diversification Opportunities for Han Kook and Dreamus
Very weak diversification
The 3 months correlation between Han and Dreamus is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Han Kook Capital and Dreamus Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreamus Company 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 Dreamus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreamus Company has no effect on the direction of Han Kook i.e., Han Kook and Dreamus go up and down completely randomly.
Pair Corralation between Han Kook and Dreamus
Assuming the 90 days trading horizon Han Kook is expected to generate 5.69 times less return on investment than Dreamus. But when comparing it to its historical volatility, Han Kook Capital is 2.37 times less risky than Dreamus. It trades about 0.03 of its potential returns per unit of risk. Dreamus Company is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 155,000 in Dreamus Company on September 14, 2024 and sell it today you would earn a total of 6,600 from holding Dreamus Company or generate 4.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Han Kook Capital vs. Dreamus Company
Performance |
| Timeline |
| Han Kook Capital |
| Dreamus Company |
Han Kook and Dreamus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Han Kook and Dreamus
The main advantage of trading using opposite Han Kook and Dreamus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Han Kook position performs unexpectedly, Dreamus 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 Dreamus will offset losses from the drop in Dreamus' 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 |
| Dreamus vs. Polaris Office Corp | Dreamus vs. CKH Food Health | Dreamus vs. CU Medical Systems | Dreamus vs. Hanjin Transportation 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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