Correlation Between Korea Information and Hanwha Life
Can any of the company-specific risk be diversified away by investing in both Korea Information and Hanwha Life 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 Korea Information and Hanwha Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Information Communications and Hanwha Life Insurance, you can compare the effects of market volatilities on Korea Information and Hanwha Life 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 Korea Information with a short position of Hanwha Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Hanwha Life.
Diversification Opportunities for Korea Information and Hanwha Life
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Hanwha is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Communicatio and Hanwha Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Life Insurance and Korea 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 Korea Information Communications are associated (or correlated) with Hanwha Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Life Insurance has no effect on the direction of Korea Information i.e., Korea Information and Hanwha Life go up and down completely randomly.
Pair Corralation between Korea Information and Hanwha Life
Assuming the 90 days trading horizon Korea Information Communications is expected to generate 1.16 times more return on investment than Hanwha Life. However, Korea Information is 1.16 times more volatile than Hanwha Life Insurance. It trades about 0.15 of its potential returns per unit of risk. Hanwha Life Insurance is currently generating about -0.1 per unit of risk. If you would invest 779,000 in Korea Information Communications on October 24, 2024 and sell it today you would earn a total of 20,000 from holding Korea Information Communications or generate 2.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Communicatio vs. Hanwha Life Insurance
Performance |
| Timeline |
| Korea Information |
| Hanwha Life Insurance |
Korea Information and Hanwha Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Hanwha Life
The main advantage of trading using opposite Korea Information and Hanwha Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, Hanwha Life 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 Hanwha Life will offset losses from the drop in Hanwha Life's long position.| Korea Information vs. Dongbang Transport Logistics | Korea Information vs. EV Advanced Material | Korea Information vs. Daejoo Electronic Materials | Korea Information vs. Seoyon Topmetal Co |
| Hanwha Life vs. Jin Air Co | Hanwha Life vs. DSC Investment | Hanwha Life vs. Pureun Mutual Savings | Hanwha Life vs. Daelim Trading 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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