Correlation Between Kwang Jin and Hansol Homedeco
Can any of the company-specific risk be diversified away by investing in both Kwang Jin and Hansol Homedeco 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 Kwang Jin and Hansol Homedeco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kwang Jin Ind and Hansol Homedeco Co, you can compare the effects of market volatilities on Kwang Jin and Hansol Homedeco 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 Kwang Jin with a short position of Hansol Homedeco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kwang Jin and Hansol Homedeco.
Diversification Opportunities for Kwang Jin and Hansol Homedeco
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kwang and Hansol is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Kwang Jin Ind and Hansol Homedeco Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansol Homedeco and Kwang Jin 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 Kwang Jin Ind are associated (or correlated) with Hansol Homedeco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansol Homedeco has no effect on the direction of Kwang Jin i.e., Kwang Jin and Hansol Homedeco go up and down completely randomly.
Pair Corralation between Kwang Jin and Hansol Homedeco
Assuming the 90 days trading horizon Kwang Jin Ind is expected to generate 0.74 times more return on investment than Hansol Homedeco. However, Kwang Jin Ind is 1.36 times less risky than Hansol Homedeco. It trades about 0.07 of its potential returns per unit of risk. Hansol Homedeco Co is currently generating about 0.05 per unit of risk. If you would invest 198,500 in Kwang Jin Ind on September 19, 2024 and sell it today you would earn a total of 5,000 from holding Kwang Jin Ind or generate 2.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kwang Jin Ind vs. Hansol Homedeco Co
Performance |
| Timeline |
| Kwang Jin Ind |
| Hansol Homedeco |
Kwang Jin and Hansol Homedeco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kwang Jin and Hansol Homedeco
The main advantage of trading using opposite Kwang Jin and Hansol Homedeco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kwang Jin position performs unexpectedly, Hansol Homedeco 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 Hansol Homedeco will offset losses from the drop in Hansol Homedeco's long position.| Kwang Jin vs. SK Telecom Co | Kwang Jin vs. Korea Information Communications | Kwang Jin vs. Hansol Homedeco Co | Kwang Jin vs. Kukil Metal Co |
| Hansol Homedeco vs. Samsung Electronics Co | Hansol Homedeco vs. Samsung Electronics Co | Hansol Homedeco vs. SK Hynix | Hansol Homedeco vs. POSCO Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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