Correlation Between Korea Real and Hwaseung Industries
Can any of the company-specific risk be diversified away by investing in both Korea Real and Hwaseung Industries 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 Hwaseung Industries 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 Hwaseung Industries Co, you can compare the effects of market volatilities on Korea Real and Hwaseung Industries 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 Hwaseung Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and Hwaseung Industries.
Diversification Opportunities for Korea Real and Hwaseung Industries
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Hwaseung is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and Hwaseung Industries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwaseung Industries 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 Hwaseung Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwaseung Industries has no effect on the direction of Korea Real i.e., Korea Real and Hwaseung Industries go up and down completely randomly.
Pair Corralation between Korea Real and Hwaseung Industries
Assuming the 90 days trading horizon Korea Real Estate is expected to under-perform the Hwaseung Industries. But the stock apears to be less risky and, when comparing its historical volatility, Korea Real Estate is 2.43 times less risky than Hwaseung Industries. The stock trades about -0.14 of its potential returns per unit of risk. The Hwaseung Industries Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 419,000 in Hwaseung Industries Co on September 5, 2024 and sell it today you would lose (1,500) from holding Hwaseung Industries Co or give up 0.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. Hwaseung Industries Co
Performance |
| Timeline |
| Korea Real Estate |
| Hwaseung Industries |
Korea Real and Hwaseung Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and Hwaseung Industries
The main advantage of trading using opposite Korea Real and Hwaseung Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, Hwaseung Industries 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 Hwaseung Industries will offset losses from the drop in Hwaseung Industries' long position.| Korea Real vs. Samsung Electronics Co | Korea Real vs. Samsung Electronics Co | Korea Real vs. LG Energy Solution | Korea Real vs. SK Hynix |
| Hwaseung Industries vs. Korea Real Estate | Hwaseung Industries vs. Busan Industrial Co | Hwaseung Industries vs. UNISEM Co | Hwaseung Industries vs. RPBio Inc |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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