Correlation Between Korea Real and HANA Micron
Can any of the company-specific risk be diversified away by investing in both Korea Real and HANA Micron 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 HANA Micron 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 HANA Micron, you can compare the effects of market volatilities on Korea Real and HANA Micron 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 HANA Micron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and HANA Micron.
Diversification Opportunities for Korea Real and HANA Micron
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and HANA is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and HANA Micron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANA Micron 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 HANA Micron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANA Micron has no effect on the direction of Korea Real i.e., Korea Real and HANA Micron go up and down completely randomly.
Pair Corralation between Korea Real and HANA Micron
Assuming the 90 days trading horizon Korea Real Estate is expected to under-perform the HANA Micron. But the stock apears to be less risky and, when comparing its historical volatility, Korea Real Estate is 4.25 times less risky than HANA Micron. The stock trades about -0.04 of its potential returns per unit of risk. The HANA Micron is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 903,481 in HANA Micron on September 3, 2024 and sell it today you would earn a total of 59,519 from holding HANA Micron or generate 6.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. HANA Micron
Performance |
| Timeline |
| Korea Real Estate |
| HANA Micron |
Korea Real and HANA Micron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and HANA Micron
The main advantage of trading using opposite Korea Real and HANA Micron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, HANA Micron 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 HANA Micron will offset losses from the drop in HANA Micron's long position.| Korea Real vs. Sejong Telecom | Korea Real vs. Mobileleader CoLtd | Korea Real vs. Lotte Data Communication | Korea Real vs. Wireless Power Amplifier |
| HANA Micron vs. Haitai Confectionery Foods | HANA Micron vs. CJ Seafood Corp | HANA Micron vs. Samlip General Foods | HANA Micron vs. Foodnamoo |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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