Correlation Between Samsung Card and Hankook Furniture
Can any of the company-specific risk be diversified away by investing in both Samsung Card and Hankook Furniture 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 Samsung Card and Hankook Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Card Co and Hankook Furniture Co, you can compare the effects of market volatilities on Samsung Card and Hankook Furniture 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 Samsung Card with a short position of Hankook Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Card and Hankook Furniture.
Diversification Opportunities for Samsung Card and Hankook Furniture
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Samsung and Hankook is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Card Co and Hankook Furniture Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankook Furniture and Samsung Card 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 Samsung Card Co are associated (or correlated) with Hankook Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankook Furniture has no effect on the direction of Samsung Card i.e., Samsung Card and Hankook Furniture go up and down completely randomly.
Pair Corralation between Samsung Card and Hankook Furniture
Assuming the 90 days trading horizon Samsung Card Co is expected to under-perform the Hankook Furniture. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Card Co is 1.02 times less risky than Hankook Furniture. The stock trades about -0.01 of its potential returns per unit of risk. The Hankook Furniture Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 358,270 in Hankook Furniture Co on October 14, 2024 and sell it today you would earn a total of 42,230 from holding Hankook Furniture Co or generate 11.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Card Co vs. Hankook Furniture Co
Performance |
| Timeline |
| Samsung Card |
| Hankook Furniture |
Samsung Card and Hankook Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Card and Hankook Furniture
The main advantage of trading using opposite Samsung Card and Hankook Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Card position performs unexpectedly, Hankook Furniture 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 Hankook Furniture will offset losses from the drop in Hankook Furniture's long position.| Samsung Card vs. Ilji Technology Co | Samsung Card vs. Seers Technology | Samsung Card vs. Lotte Non Life Insurance | Samsung Card vs. Innowireless Co |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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