Correlation Between Homecast CoLtd and Songwon Industrial
Can any of the company-specific risk be diversified away by investing in both Homecast CoLtd and Songwon Industrial 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 Homecast CoLtd and Songwon Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Homecast CoLtd and Songwon Industrial Co, you can compare the effects of market volatilities on Homecast CoLtd and Songwon Industrial 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 Homecast CoLtd with a short position of Songwon Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Homecast CoLtd and Songwon Industrial.
Diversification Opportunities for Homecast CoLtd and Songwon Industrial
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Homecast and Songwon is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Homecast CoLtd and Songwon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Songwon Industrial and Homecast CoLtd 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 Homecast CoLtd are associated (or correlated) with Songwon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Songwon Industrial has no effect on the direction of Homecast CoLtd i.e., Homecast CoLtd and Songwon Industrial go up and down completely randomly.
Pair Corralation between Homecast CoLtd and Songwon Industrial
Assuming the 90 days trading horizon Homecast CoLtd is expected to under-perform the Songwon Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Homecast CoLtd is 1.29 times less risky than Songwon Industrial. The stock trades about -0.03 of its potential returns per unit of risk. The Songwon Industrial Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,142,000 in Songwon Industrial Co on August 25, 2024 and sell it today you would lose (52,000) from holding Songwon Industrial Co or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Homecast CoLtd vs. Songwon Industrial Co
Performance |
| Timeline |
| Homecast CoLtd |
| Songwon Industrial |
Homecast CoLtd and Songwon Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Homecast CoLtd and Songwon Industrial
The main advantage of trading using opposite Homecast CoLtd and Songwon Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Homecast CoLtd position performs unexpectedly, Songwon Industrial 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 Songwon Industrial will offset losses from the drop in Songwon Industrial's long position.| Homecast CoLtd vs. Korea Real Estate | Homecast CoLtd vs. Korea Ratings Co | Homecast CoLtd vs. IQuest Co | Homecast CoLtd vs. Wonbang Tech Co |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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