Correlation Between Korea Real and Hanwha InvestmentSecuri
Can any of the company-specific risk be diversified away by investing in both Korea Real and Hanwha InvestmentSecuri 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 Korea Real and Hanwha InvestmentSecuri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Real Estate and Hanwha InvestmentSecurities Co, you can compare the effects of market volatilities on Korea Real and Hanwha InvestmentSecuri 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 Korea Real with a short position of Hanwha InvestmentSecuri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and Hanwha InvestmentSecuri.
Diversification Opportunities for Korea Real and Hanwha InvestmentSecuri
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Hanwha is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and Hanwha InvestmentSecurities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha InvestmentSecuri and Korea Real 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 Korea Real Estate are associated (or correlated) with Hanwha InvestmentSecuri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha InvestmentSecuri has no effect on the direction of Korea Real i.e., Korea Real and Hanwha InvestmentSecuri go up and down completely randomly.
Pair Corralation between Korea Real and Hanwha InvestmentSecuri
Assuming the 90 days trading horizon Korea Real Estate is expected to under-perform the Hanwha InvestmentSecuri. But the stock apears to be less risky and, when comparing its historical volatility, Korea Real Estate is 4.43 times less risky than Hanwha InvestmentSecuri. The stock trades about -0.12 of its potential returns per unit of risk. The Hanwha InvestmentSecurities Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 347,000 in Hanwha InvestmentSecurities Co on November 2, 2024 and sell it today you would earn a total of 11,000 from holding Hanwha InvestmentSecurities Co or generate 3.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. Hanwha InvestmentSecurities Co
Performance |
| Timeline |
| Korea Real Estate |
| Hanwha InvestmentSecuri |
Korea Real and Hanwha InvestmentSecuri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and Hanwha InvestmentSecuri
The main advantage of trading using opposite Korea Real and Hanwha InvestmentSecuri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, Hanwha InvestmentSecuri 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 Hanwha InvestmentSecuri will offset losses from the drop in Hanwha InvestmentSecuri's long position.| Korea Real vs. Lotte Data Communication | Korea Real vs. Kukil Metal Co | Korea Real vs. SK Chemicals Co | Korea Real vs. NICE Information Service |
| Hanwha InvestmentSecuri vs. Hyundai Industrial Co | Hanwha InvestmentSecuri vs. Formetal Co | Hanwha InvestmentSecuri vs. DRB Industrial Co | Hanwha InvestmentSecuri vs. Pyung Hwa Industrial |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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