Correlation Between Han Kook and Koryo Credit
Can any of the company-specific risk be diversified away by investing in both Han Kook and Koryo Credit 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 Koryo Credit 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 Koryo Credit Information, you can compare the effects of market volatilities on Han Kook and Koryo Credit 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 Koryo Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Han Kook and Koryo Credit.
Diversification Opportunities for Han Kook and Koryo Credit
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Han and Koryo is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Han Kook Steel and Koryo Credit Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koryo Credit Information 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 Koryo Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koryo Credit Information has no effect on the direction of Han Kook i.e., Han Kook and Koryo Credit go up and down completely randomly.
Pair Corralation between Han Kook and Koryo Credit
Assuming the 90 days trading horizon Han Kook Steel is expected to under-perform the Koryo Credit. In addition to that, Han Kook is 2.23 times more volatile than Koryo Credit Information. It trades about -0.03 of its total potential returns per unit of risk. Koryo Credit Information is currently generating about 0.02 per unit of volatility. If you would invest 943,069 in Koryo Credit Information on October 11, 2024 and sell it today you would earn a total of 61,931 from holding Koryo Credit Information or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Han Kook Steel vs. Koryo Credit Information
Performance |
| Timeline |
| Han Kook Steel |
| Koryo Credit Information |
Han Kook and Koryo Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Han Kook and Koryo Credit
The main advantage of trading using opposite Han Kook and Koryo Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Han Kook position performs unexpectedly, Koryo Credit 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 Koryo Credit will offset losses from the drop in Koryo Credit's long position.| Han Kook vs. LG Display Co | Han Kook vs. LG Household Healthcare | Han Kook vs. Innowireless Co | Han Kook vs. Lotte Data Communication |
| Koryo Credit vs. Sungdo Engineering Construction | Koryo Credit vs. Heungkuk Metaltech CoLtd | Koryo Credit vs. Genie Music | Koryo Credit vs. Seohee Construction 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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