Correlation Between Geumhwa Plant and Organic Special
Can any of the company-specific risk be diversified away by investing in both Geumhwa Plant and Organic Special 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 Geumhwa Plant and Organic Special into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geumhwa Plant Service and Organic Special Pet, you can compare the effects of market volatilities on Geumhwa Plant and Organic Special 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 Geumhwa Plant with a short position of Organic Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geumhwa Plant and Organic Special.
Diversification Opportunities for Geumhwa Plant and Organic Special
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Geumhwa and Organic is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Geumhwa Plant Service and Organic Special Pet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Organic Special Pet and Geumhwa Plant 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 Geumhwa Plant Service are associated (or correlated) with Organic Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Organic Special Pet has no effect on the direction of Geumhwa Plant i.e., Geumhwa Plant and Organic Special go up and down completely randomly.
Pair Corralation between Geumhwa Plant and Organic Special
Assuming the 90 days trading horizon Geumhwa Plant Service is expected to generate 0.57 times more return on investment than Organic Special. However, Geumhwa Plant Service is 1.75 times less risky than Organic Special. It trades about -0.33 of its potential returns per unit of risk. Organic Special Pet is currently generating about -0.3 per unit of risk. If you would invest 2,790,000 in Geumhwa Plant Service on September 12, 2024 and sell it today you would lose (320,000) from holding Geumhwa Plant Service or give up 11.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Geumhwa Plant Service vs. Organic Special Pet
Performance |
| Timeline |
| Geumhwa Plant Service |
| Organic Special Pet |
Geumhwa Plant and Organic Special Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geumhwa Plant and Organic Special
The main advantage of trading using opposite Geumhwa Plant and Organic Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geumhwa Plant position performs unexpectedly, Organic Special 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 Organic Special will offset losses from the drop in Organic Special's long position.| Geumhwa Plant vs. Korea New Network | Geumhwa Plant vs. Solution Advanced Technology | Geumhwa Plant vs. Busan Industrial Co | Geumhwa Plant vs. Busan Ind |
| Organic Special vs. Samsung Electronics Co | Organic Special vs. Samsung Electronics Co | Organic Special vs. LG Energy Solution | Organic Special vs. SK Hynix |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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