Correlation Between ChipsMedia and Hankook Furniture
Can any of the company-specific risk be diversified away by investing in both ChipsMedia 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 ChipsMedia and Hankook Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ChipsMedia and Hankook Furniture Co, you can compare the effects of market volatilities on ChipsMedia 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 ChipsMedia with a short position of Hankook Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChipsMedia and Hankook Furniture.
Diversification Opportunities for ChipsMedia and Hankook Furniture
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ChipsMedia and Hankook is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ChipsMedia and Hankook Furniture Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankook Furniture and ChipsMedia 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 ChipsMedia 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 ChipsMedia i.e., ChipsMedia and Hankook Furniture go up and down completely randomly.
Pair Corralation between ChipsMedia and Hankook Furniture
Assuming the 90 days trading horizon ChipsMedia is expected to generate 3.57 times more return on investment than Hankook Furniture. However, ChipsMedia is 3.57 times more volatile than Hankook Furniture Co. It trades about 0.05 of its potential returns per unit of risk. Hankook Furniture Co is currently generating about 0.0 per unit of risk. If you would invest 795,050 in ChipsMedia on October 16, 2024 and sell it today you would earn a total of 819,950 from holding ChipsMedia or generate 103.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ChipsMedia vs. Hankook Furniture Co
Performance |
| Timeline |
| ChipsMedia |
| Hankook Furniture |
ChipsMedia and Hankook Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChipsMedia and Hankook Furniture
The main advantage of trading using opposite ChipsMedia and Hankook Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChipsMedia 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.| ChipsMedia vs. INFINITT Healthcare Co | ChipsMedia vs. Hana Materials | ChipsMedia vs. Kolon Plastics | ChipsMedia vs. Korean Reinsurance Co |
| Hankook Furniture vs. CKH Food Health | Hankook Furniture vs. Chorokbaem Healthcare Co | Hankook Furniture vs. ChipsMedia | Hankook Furniture vs. LG Household Healthcare |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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