Correlation Between Korea Information and Hyosung Advanced
Can any of the company-specific risk be diversified away by investing in both Korea Information and Hyosung Advanced 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 Information and Hyosung Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Information Engineering and Hyosung Advanced Materials, you can compare the effects of market volatilities on Korea Information and Hyosung Advanced 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 Information with a short position of Hyosung Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Hyosung Advanced.
Diversification Opportunities for Korea Information and Hyosung Advanced
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Hyosung is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Engineering and Hyosung Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyosung Advanced Mat and Korea Information 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 Information Engineering are associated (or correlated) with Hyosung Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyosung Advanced Mat has no effect on the direction of Korea Information i.e., Korea Information and Hyosung Advanced go up and down completely randomly.
Pair Corralation between Korea Information and Hyosung Advanced
Assuming the 90 days trading horizon Korea Information Engineering is expected to generate 1.19 times more return on investment than Hyosung Advanced. However, Korea Information is 1.19 times more volatile than Hyosung Advanced Materials. It trades about -0.02 of its potential returns per unit of risk. Hyosung Advanced Materials is currently generating about -0.05 per unit of risk. If you would invest 420,000 in Korea Information Engineering on October 13, 2024 and sell it today you would lose (165,000) from holding Korea Information Engineering or give up 39.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Engineering vs. Hyosung Advanced Materials
Performance |
| Timeline |
| Korea Information |
| Hyosung Advanced Mat |
Korea Information and Hyosung Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Hyosung Advanced
The main advantage of trading using opposite Korea Information and Hyosung Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, Hyosung Advanced 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 Hyosung Advanced will offset losses from the drop in Hyosung Advanced's long position.| Korea Information vs. LG Household Healthcare | Korea Information vs. J Steel Co | Korea Information vs. Osang Healthcare Co,Ltd | Korea Information vs. Hankuk Steel Wire |
| Hyosung Advanced vs. LG Household Healthcare | Hyosung Advanced vs. SungMoon Electronics Co | Hyosung Advanced vs. Koryo Credit Information | Hyosung Advanced vs. Korea Information Engineering |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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