Correlation Between Homecast CoLtd and Choil Aluminum
Can any of the company-specific risk be diversified away by investing in both Homecast CoLtd and Choil Aluminum 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 Choil Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Homecast CoLtd and Choil Aluminum, you can compare the effects of market volatilities on Homecast CoLtd and Choil Aluminum 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 Choil Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Homecast CoLtd and Choil Aluminum.
Diversification Opportunities for Homecast CoLtd and Choil Aluminum
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Homecast and Choil is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Homecast CoLtd and Choil Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choil Aluminum 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 Choil Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choil Aluminum has no effect on the direction of Homecast CoLtd i.e., Homecast CoLtd and Choil Aluminum go up and down completely randomly.
Pair Corralation between Homecast CoLtd and Choil Aluminum
Assuming the 90 days trading horizon Homecast CoLtd is expected to generate 1.3 times more return on investment than Choil Aluminum. However, Homecast CoLtd is 1.3 times more volatile than Choil Aluminum. It trades about -0.01 of its potential returns per unit of risk. Choil Aluminum is currently generating about -0.01 per unit of risk. If you would invest 435,000 in Homecast CoLtd on September 24, 2024 and sell it today you would lose (192,500) from holding Homecast CoLtd or give up 44.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Homecast CoLtd vs. Choil Aluminum
Performance |
| Timeline |
| Homecast CoLtd |
| Choil Aluminum |
Homecast CoLtd and Choil Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Homecast CoLtd and Choil Aluminum
The main advantage of trading using opposite Homecast CoLtd and Choil Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Homecast CoLtd position performs unexpectedly, Choil Aluminum 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 Choil Aluminum will offset losses from the drop in Choil Aluminum's long position.| Homecast CoLtd vs. Hansol Chemical Co | Homecast CoLtd vs. Shinhan Financial Group | Homecast CoLtd vs. Dongnam Chemical Co | Homecast CoLtd vs. Kukdo Chemical Co |
| Choil Aluminum vs. Hana Financial 7 | Choil Aluminum vs. Hyundai Mobis | Choil Aluminum vs. Hanwha InvestmentSecurities Co | Choil Aluminum vs. SM Entertainment 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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