Correlation Between Han Kook and Samick Musical
Can any of the company-specific risk be diversified away by investing in both Han Kook and Samick Musical 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 Samick Musical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Han Kook Steel and Samick Musical Instruments, you can compare the effects of market volatilities on Han Kook and Samick Musical 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 Samick Musical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Han Kook and Samick Musical.
Diversification Opportunities for Han Kook and Samick Musical
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Han and Samick is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Han Kook Steel and Samick Musical Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samick Musical Instr 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 Steel are associated (or correlated) with Samick Musical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samick Musical Instr has no effect on the direction of Han Kook i.e., Han Kook and Samick Musical go up and down completely randomly.
Pair Corralation between Han Kook and Samick Musical
Assuming the 90 days trading horizon Han Kook Steel is expected to under-perform the Samick Musical. But the stock apears to be less risky and, when comparing its historical volatility, Han Kook Steel is 4.07 times less risky than Samick Musical. The stock trades about -0.24 of its potential returns per unit of risk. The Samick Musical Instruments is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 116,900 in Samick Musical Instruments on November 3, 2024 and sell it today you would earn a total of 21,800 from holding Samick Musical Instruments or generate 18.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Han Kook Steel vs. Samick Musical Instruments
Performance |
| Timeline |
| Han Kook Steel |
| Samick Musical Instr |
Han Kook and Samick Musical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Han Kook and Samick Musical
The main advantage of trading using opposite Han Kook and Samick Musical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Han Kook position performs unexpectedly, Samick Musical 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 Samick Musical will offset losses from the drop in Samick Musical's long position.| Han Kook vs. E Investment Development | Han Kook vs. Daol Investment Securities | Han Kook vs. Atinum Investment Co | Han Kook vs. KTB Investment Securities |
| Samick Musical vs. Daejung Chemicals Metals | Samick Musical vs. Korea Shipbuilding Offshore | Samick Musical vs. Youngsin Metal Industrial | Samick Musical vs. DONGKUK TED METAL |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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