Correlation Between ED and Hankukpackage
Can any of the company-specific risk be diversified away by investing in both ED and Hankukpackage 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 ED and Hankukpackage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ED Co and Hankukpackage Co, you can compare the effects of market volatilities on ED and Hankukpackage 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 ED with a short position of Hankukpackage. Check out your portfolio center. Please also check ongoing floating volatility patterns of ED and Hankukpackage.
Diversification Opportunities for ED and Hankukpackage
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ED and Hankukpackage is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding ED Co and Hankukpackage Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankukpackage and ED 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 ED Co are associated (or correlated) with Hankukpackage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankukpackage has no effect on the direction of ED i.e., ED and Hankukpackage go up and down completely randomly.
Pair Corralation between ED and Hankukpackage
Assuming the 90 days trading horizon ED Co is expected to under-perform the Hankukpackage. In addition to that, ED is 3.6 times more volatile than Hankukpackage Co. It trades about -0.32 of its total potential returns per unit of risk. Hankukpackage Co is currently generating about -0.22 per unit of volatility. If you would invest 199,200 in Hankukpackage Co on August 31, 2024 and sell it today you would lose (12,500) from holding Hankukpackage Co or give up 6.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
ED Co vs. Hankukpackage Co
Performance |
| Timeline |
| ED Co |
| Hankukpackage |
ED and Hankukpackage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ED and Hankukpackage
The main advantage of trading using opposite ED and Hankukpackage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ED position performs unexpectedly, Hankukpackage 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 Hankukpackage will offset losses from the drop in Hankukpackage's long position.| ED vs. Hankukpackage Co | ED vs. Sempio Foods Co | ED vs. Nice Information Telecommunication | ED vs. LG Chemicals |
| Hankukpackage vs. Busan Industrial Co | Hankukpackage vs. Busan Ind | Hankukpackage vs. Mirae Asset Daewoo | Hankukpackage vs. Finebesteel |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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