Correlation Between Han Kook and Foodnamoo
Can any of the company-specific risk be diversified away by investing in both Han Kook and Foodnamoo 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 Foodnamoo 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 Foodnamoo, you can compare the effects of market volatilities on Han Kook and Foodnamoo 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 Foodnamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Han Kook and Foodnamoo.
Diversification Opportunities for Han Kook and Foodnamoo
Average diversification
The 3 months correlation between Han and Foodnamoo is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Han Kook Steel and Foodnamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foodnamoo 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 Foodnamoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foodnamoo has no effect on the direction of Han Kook i.e., Han Kook and Foodnamoo go up and down completely randomly.
Pair Corralation between Han Kook and Foodnamoo
Assuming the 90 days trading horizon Han Kook Steel is expected to generate 0.75 times more return on investment than Foodnamoo. However, Han Kook Steel is 1.33 times less risky than Foodnamoo. It trades about -0.04 of its potential returns per unit of risk. Foodnamoo is currently generating about -0.07 per unit of risk. If you would invest 298,500 in Han Kook Steel on October 16, 2024 and sell it today you would lose (109,700) from holding Han Kook Steel or give up 36.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Han Kook Steel vs. Foodnamoo
Performance |
| Timeline |
| Han Kook Steel |
| Foodnamoo |
Han Kook and Foodnamoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Han Kook and Foodnamoo
The main advantage of trading using opposite Han Kook and Foodnamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Han Kook position performs unexpectedly, Foodnamoo 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 Foodnamoo will offset losses from the drop in Foodnamoo's long position.| Han Kook vs. Tuksu Engineering ConstructionLtd | Han Kook vs. Sungdo Engineering Construction | Han Kook vs. Genie Music | Han Kook vs. Lotte Data Communication |
| Foodnamoo vs. Phoenix Materials Co | Foodnamoo vs. Han Kook Steel | Foodnamoo vs. LS Materials | Foodnamoo vs. Nature and Environment |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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