Correlation Between Korea Investment and Hanwha InvestmentSecuri
Can any of the company-specific risk be diversified away by investing in both Korea Investment and Hanwha InvestmentSecuri 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 Investment and Hanwha InvestmentSecuri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Investment Holdings and Hanwha InvestmentSecurities Co, you can compare the effects of market volatilities on Korea Investment and Hanwha InvestmentSecuri 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 Investment with a short position of Hanwha InvestmentSecuri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Investment and Hanwha InvestmentSecuri.
Diversification Opportunities for Korea Investment and Hanwha InvestmentSecuri
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Hanwha is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Korea Investment Holdings and Hanwha InvestmentSecurities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha InvestmentSecuri and Korea Investment 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 Investment Holdings are associated (or correlated) with Hanwha InvestmentSecuri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha InvestmentSecuri has no effect on the direction of Korea Investment i.e., Korea Investment and Hanwha InvestmentSecuri go up and down completely randomly.
Pair Corralation between Korea Investment and Hanwha InvestmentSecuri
Assuming the 90 days trading horizon Korea Investment is expected to generate 3.72 times less return on investment than Hanwha InvestmentSecuri. But when comparing it to its historical volatility, Korea Investment Holdings is 3.57 times less risky than Hanwha InvestmentSecuri. It trades about 0.04 of its potential returns per unit of risk. Hanwha InvestmentSecurities Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 511,833 in Hanwha InvestmentSecurities Co on August 28, 2024 and sell it today you would earn a total of 243,167 from holding Hanwha InvestmentSecurities Co or generate 47.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Investment Holdings vs. Hanwha InvestmentSecurities Co
Performance |
| Timeline |
| Korea Investment Holdings |
| Hanwha InvestmentSecuri |
Korea Investment and Hanwha InvestmentSecuri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Investment and Hanwha InvestmentSecuri
The main advantage of trading using opposite Korea Investment and Hanwha InvestmentSecuri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Investment position performs unexpectedly, Hanwha InvestmentSecuri 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 Hanwha InvestmentSecuri will offset losses from the drop in Hanwha InvestmentSecuri's long position.| Korea Investment vs. Samji Electronics Co | Korea Investment vs. Sunny Electronics Corp | Korea Investment vs. Genie Music | Korea Investment vs. Alton Sports CoLtd |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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