Correlation Between Han Kook and Korea Investment
Can any of the company-specific risk be diversified away by investing in both Han Kook and Korea Investment 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 Korea Investment 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 Korea Investment Holdings, you can compare the effects of market volatilities on Han Kook and Korea Investment 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 Korea Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Han Kook and Korea Investment.
Diversification Opportunities for Han Kook and Korea Investment
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Han and Korea is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Han Kook Steel and Korea Investment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Investment Holdings 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 Korea Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Investment Holdings has no effect on the direction of Han Kook i.e., Han Kook and Korea Investment go up and down completely randomly.
Pair Corralation between Han Kook and Korea Investment
Assuming the 90 days trading horizon Han Kook is expected to generate 5.19 times less return on investment than Korea Investment. In addition to that, Han Kook is 3.11 times more volatile than Korea Investment Holdings. It trades about 0.0 of its total potential returns per unit of risk. Korea Investment Holdings is currently generating about 0.05 per unit of volatility. If you would invest 5,220,000 in Korea Investment Holdings on October 14, 2024 and sell it today you would earn a total of 190,000 from holding Korea Investment Holdings or generate 3.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Han Kook Steel vs. Korea Investment Holdings
Performance |
Timeline |
Han Kook Steel |
Korea Investment Holdings |
Han Kook and Korea Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Han Kook and Korea Investment
The main advantage of trading using opposite Han Kook and Korea Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Han Kook position performs unexpectedly, Korea Investment 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 Korea Investment will offset losses from the drop in Korea Investment's long position.Han Kook vs. LG Display Co | Han Kook vs. Sung Bo Chemicals | Han Kook vs. Insun Environment New | Han Kook vs. J Steel Co |
Korea Investment vs. Insun Environment New | Korea Investment vs. Jeju Beer Co | Korea Investment vs. Han Kook Steel | Korea Investment vs. Lotte Data Communication |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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