Correlation Between Korea Real and Humax
Can any of the company-specific risk be diversified away by investing in both Korea Real and Humax 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 Humax 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 Humax Co, you can compare the effects of market volatilities on Korea Real and Humax 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 Humax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and Humax.
Diversification Opportunities for Korea Real and Humax
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Korea and Humax is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and Humax Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humax 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 Humax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humax has no effect on the direction of Korea Real i.e., Korea Real and Humax go up and down completely randomly.
Pair Corralation between Korea Real and Humax
Assuming the 90 days trading horizon Korea Real Estate is expected to under-perform the Humax. But the stock apears to be less risky and, when comparing its historical volatility, Korea Real Estate is 2.49 times less risky than Humax. The stock trades about -0.22 of its potential returns per unit of risk. The Humax Co is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 119,200 in Humax Co on October 24, 2024 and sell it today you would earn a total of 12,400 from holding Humax Co or generate 10.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. Humax Co
Performance |
| Timeline |
| Korea Real Estate |
| Humax |
Korea Real and Humax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and Humax
The main advantage of trading using opposite Korea Real and Humax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, Humax 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 Humax will offset losses from the drop in Humax's long position.| Korea Real vs. Kakao Games Corp | Korea Real vs. BIT Computer Co | Korea Real vs. Samsung Publishing Co | Korea Real vs. Eagle Veterinary Technology |
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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