Correlation Between ABCO Electronics and HJ ShipBuilding
Can any of the company-specific risk be diversified away by investing in both ABCO Electronics and HJ ShipBuilding 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 ABCO Electronics and HJ ShipBuilding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABCO Electronics Co and HJ ShipBuilding Construction, you can compare the effects of market volatilities on ABCO Electronics and HJ ShipBuilding 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 ABCO Electronics with a short position of HJ ShipBuilding. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABCO Electronics and HJ ShipBuilding.
Diversification Opportunities for ABCO Electronics and HJ ShipBuilding
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ABCO and 097230 is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding ABCO Electronics Co and HJ ShipBuilding Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HJ ShipBuilding Cons and ABCO Electronics 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 ABCO Electronics Co are associated (or correlated) with HJ ShipBuilding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HJ ShipBuilding Cons has no effect on the direction of ABCO Electronics i.e., ABCO Electronics and HJ ShipBuilding go up and down completely randomly.
Pair Corralation between ABCO Electronics and HJ ShipBuilding
Assuming the 90 days trading horizon ABCO Electronics is expected to generate 43.31 times less return on investment than HJ ShipBuilding. But when comparing it to its historical volatility, ABCO Electronics Co is 2.49 times less risky than HJ ShipBuilding. It trades about 0.01 of its potential returns per unit of risk. HJ ShipBuilding Construction is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 300,000 in HJ ShipBuilding Construction on September 13, 2024 and sell it today you would earn a total of 82,500 from holding HJ ShipBuilding Construction or generate 27.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABCO Electronics Co vs. HJ ShipBuilding Construction
Performance |
| Timeline |
| ABCO Electronics |
| HJ ShipBuilding Cons |
ABCO Electronics and HJ ShipBuilding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABCO Electronics and HJ ShipBuilding
The main advantage of trading using opposite ABCO Electronics and HJ ShipBuilding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABCO Electronics position performs unexpectedly, HJ ShipBuilding 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 HJ ShipBuilding will offset losses from the drop in HJ ShipBuilding's long position.| ABCO Electronics vs. Cube Entertainment | ABCO Electronics vs. Dreamus Company | ABCO Electronics vs. LG Energy Solution | ABCO Electronics vs. Dongwon System |
| HJ ShipBuilding vs. Kisan Telecom Co | HJ ShipBuilding vs. Korean Drug Co | HJ ShipBuilding vs. CJ Seafood Corp | HJ ShipBuilding vs. Sejong Telecom |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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