Correlation Between Hyunwoo Industrial and Cheryong Industrial
Can any of the company-specific risk be diversified away by investing in both Hyunwoo Industrial and Cheryong 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 Hyunwoo Industrial and Cheryong Industrial 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 Cheryong Industrial CoLtd, you can compare the effects of market volatilities on Hyunwoo Industrial and Cheryong 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 Hyunwoo Industrial with a short position of Cheryong Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyunwoo Industrial and Cheryong Industrial.
Diversification Opportunities for Hyunwoo Industrial and Cheryong Industrial
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyunwoo and Cheryong is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Hyunwoo Industrial Co and Cheryong Industrial CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheryong Industrial CoLtd 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 Cheryong Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheryong Industrial CoLtd has no effect on the direction of Hyunwoo Industrial i.e., Hyunwoo Industrial and Cheryong Industrial go up and down completely randomly.
Pair Corralation between Hyunwoo Industrial and Cheryong Industrial
Assuming the 90 days trading horizon Hyunwoo Industrial Co is expected to generate 0.56 times more return on investment than Cheryong Industrial. However, Hyunwoo Industrial Co is 1.8 times less risky than Cheryong Industrial. It trades about 0.15 of its potential returns per unit of risk. Cheryong Industrial CoLtd is currently generating about -0.15 per unit of risk. If you would invest 262,500 in Hyunwoo Industrial Co on November 27, 2024 and sell it today you would earn a total of 9,500 from holding Hyunwoo Industrial Co or generate 3.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyunwoo Industrial Co vs. Cheryong Industrial CoLtd
Performance |
| Timeline |
| Hyunwoo Industrial |
| Cheryong Industrial CoLtd |
Hyunwoo Industrial and Cheryong Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyunwoo Industrial and Cheryong Industrial
The main advantage of trading using opposite Hyunwoo Industrial and Cheryong Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyunwoo Industrial position performs unexpectedly, Cheryong 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 Cheryong Industrial will offset losses from the drop in Cheryong Industrial's long position.| Hyunwoo Industrial vs. LG Household Healthcare | Hyunwoo Industrial vs. Next Entertainment World | Hyunwoo Industrial vs. T3 Entertainment Co | Hyunwoo Industrial vs. Daishin Information Communications |
| Cheryong Industrial vs. Lion Chemtech Co | Cheryong Industrial vs. Kuk Young GM | Cheryong Industrial vs. Nature and Environment | Cheryong Industrial vs. IL Science 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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