Correlation Between Hansol Homedeco and Kukdo Chemical
Can any of the company-specific risk be diversified away by investing in both Hansol Homedeco and Kukdo Chemical 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 Hansol Homedeco and Kukdo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hansol Homedeco Co and Kukdo Chemical Co, you can compare the effects of market volatilities on Hansol Homedeco and Kukdo Chemical 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 Hansol Homedeco with a short position of Kukdo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hansol Homedeco and Kukdo Chemical.
Diversification Opportunities for Hansol Homedeco and Kukdo Chemical
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hansol and Kukdo is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Hansol Homedeco Co and Kukdo Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukdo Chemical and Hansol Homedeco 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 Hansol Homedeco Co are associated (or correlated) with Kukdo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukdo Chemical has no effect on the direction of Hansol Homedeco i.e., Hansol Homedeco and Kukdo Chemical go up and down completely randomly.
Pair Corralation between Hansol Homedeco and Kukdo Chemical
Assuming the 90 days trading horizon Hansol Homedeco Co is expected to under-perform the Kukdo Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Hansol Homedeco Co is 1.43 times less risky than Kukdo Chemical. The stock trades about -0.07 of its potential returns per unit of risk. The Kukdo Chemical Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 4,229,167 in Kukdo Chemical Co on October 7, 2024 and sell it today you would lose (1,044,167) from holding Kukdo Chemical Co or give up 24.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hansol Homedeco Co vs. Kukdo Chemical Co
Performance |
| Timeline |
| Hansol Homedeco |
| Kukdo Chemical |
Hansol Homedeco and Kukdo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hansol Homedeco and Kukdo Chemical
The main advantage of trading using opposite Hansol Homedeco and Kukdo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hansol Homedeco position performs unexpectedly, Kukdo Chemical 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 Kukdo Chemical will offset losses from the drop in Kukdo Chemical's long position.| Hansol Homedeco vs. Korea Information Engineering | Hansol Homedeco vs. Hanjin Transportation Co | Hansol Homedeco vs. Koryo Credit Information | Hansol Homedeco vs. Nice Information Telecommunication |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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