Correlation Between Insung Information and Hanjoo Light
Can any of the company-specific risk be diversified away by investing in both Insung Information and Hanjoo Light 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 Insung Information and Hanjoo Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insung Information Co and Hanjoo Light Metal, you can compare the effects of market volatilities on Insung Information and Hanjoo Light 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 Insung Information with a short position of Hanjoo Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insung Information and Hanjoo Light.
Diversification Opportunities for Insung Information and Hanjoo Light
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Insung and Hanjoo is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Insung Information Co and Hanjoo Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjoo Light Metal and Insung Information 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 Insung Information Co are associated (or correlated) with Hanjoo Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanjoo Light Metal has no effect on the direction of Insung Information i.e., Insung Information and Hanjoo Light go up and down completely randomly.
Pair Corralation between Insung Information and Hanjoo Light
Assuming the 90 days trading horizon Insung Information Co is expected to generate 1.16 times more return on investment than Hanjoo Light. However, Insung Information is 1.16 times more volatile than Hanjoo Light Metal. It trades about 0.02 of its potential returns per unit of risk. Hanjoo Light Metal is currently generating about -0.06 per unit of risk. If you would invest 206,145 in Insung Information Co on August 28, 2024 and sell it today you would lose (13,345) from holding Insung Information Co or give up 6.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.84% |
| Values | Daily Returns |
Insung Information Co vs. Hanjoo Light Metal
Performance |
| Timeline |
| Insung Information |
| Hanjoo Light Metal |
Insung Information and Hanjoo Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insung Information and Hanjoo Light
The main advantage of trading using opposite Insung Information and Hanjoo Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insung Information position performs unexpectedly, Hanjoo Light 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 Hanjoo Light will offset losses from the drop in Hanjoo Light's long position.| Insung Information vs. Korea Real Estate | Insung Information vs. Korea Ratings Co | Insung Information vs. IQuest Co | Insung Information vs. Wonbang Tech Co |
| Hanjoo Light vs. Samsung Electronics Co | Hanjoo Light vs. Samsung Electronics Co | Hanjoo Light vs. LG Energy Solution | Hanjoo Light vs. SK Hynix |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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