Correlation Between Korea New and HLB Power
Can any of the company-specific risk be diversified away by investing in both Korea New and HLB Power 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 New and HLB Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea New Network and HLB Power Co, you can compare the effects of market volatilities on Korea New and HLB Power 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 New with a short position of HLB Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea New and HLB Power.
Diversification Opportunities for Korea New and HLB Power
Good diversification
The 3 months correlation between Korea and HLB is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Korea New Network and HLB Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HLB Power and Korea New 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 New Network are associated (or correlated) with HLB Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HLB Power has no effect on the direction of Korea New i.e., Korea New and HLB Power go up and down completely randomly.
Pair Corralation between Korea New and HLB Power
Assuming the 90 days trading horizon Korea New Network is expected to generate 0.55 times more return on investment than HLB Power. However, Korea New Network is 1.82 times less risky than HLB Power. It trades about -0.12 of its potential returns per unit of risk. HLB Power Co is currently generating about -0.49 per unit of risk. If you would invest 81,300 in Korea New Network on September 3, 2024 and sell it today you would lose (4,200) from holding Korea New Network or give up 5.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea New Network vs. HLB Power Co
Performance |
| Timeline |
| Korea New Network |
| HLB Power |
Korea New and HLB Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea New and HLB Power
The main advantage of trading using opposite Korea New and HLB Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea New position performs unexpectedly, HLB Power 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 HLB Power will offset losses from the drop in HLB Power's long position.| Korea New vs. Daejoo Electronic Materials | Korea New vs. Lake Materials Co | Korea New vs. Lotte Energy Materials | Korea New vs. EV Advanced Material |
| HLB Power vs. LG Display | HLB Power vs. Hyundai Motor | HLB Power vs. Hyundai Motor Co | HLB Power vs. Hyundai Motor Co |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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