Correlation Between Hyunwoo Industrial and Hankook Furniture
Can any of the company-specific risk be diversified away by investing in both Hyunwoo Industrial and Hankook Furniture 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 Hyunwoo Industrial and Hankook Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyunwoo Industrial Co and Hankook Furniture Co, you can compare the effects of market volatilities on Hyunwoo Industrial and Hankook Furniture 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 Hyunwoo Industrial with a short position of Hankook Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyunwoo Industrial and Hankook Furniture.
Diversification Opportunities for Hyunwoo Industrial and Hankook Furniture
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hyunwoo and Hankook is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Hyunwoo Industrial Co and Hankook Furniture Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankook Furniture and Hyunwoo Industrial 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 Hyunwoo Industrial Co are associated (or correlated) with Hankook Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankook Furniture has no effect on the direction of Hyunwoo Industrial i.e., Hyunwoo Industrial and Hankook Furniture go up and down completely randomly.
Pair Corralation between Hyunwoo Industrial and Hankook Furniture
Assuming the 90 days trading horizon Hyunwoo Industrial Co is expected to generate 1.62 times more return on investment than Hankook Furniture. However, Hyunwoo Industrial is 1.62 times more volatile than Hankook Furniture Co. It trades about 0.08 of its potential returns per unit of risk. Hankook Furniture Co is currently generating about 0.03 per unit of risk. If you would invest 253,150 in Hyunwoo Industrial Co on October 14, 2024 and sell it today you would earn a total of 5,350 from holding Hyunwoo Industrial Co or generate 2.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyunwoo Industrial Co vs. Hankook Furniture Co
Performance |
| Timeline |
| Hyunwoo Industrial |
| Hankook Furniture |
Hyunwoo Industrial and Hankook Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyunwoo Industrial and Hankook Furniture
The main advantage of trading using opposite Hyunwoo Industrial and Hankook Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyunwoo Industrial position performs unexpectedly, Hankook Furniture 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 Hankook Furniture will offset losses from the drop in Hankook Furniture's long position.| Hyunwoo Industrial vs. Lotte Data Communication | Hyunwoo Industrial vs. CG Hi Tech | Hyunwoo Industrial vs. Hyundai Engineering Construction | Hyunwoo Industrial vs. Nam Hwa Construction |
| Hankook Furniture vs. Jeju Bank | Hankook Furniture vs. Dong A Steel Technology | Hankook Furniture vs. Digital Imaging Technology | Hankook Furniture vs. Industrial Bank |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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