Correlation Between Haitai Confectionery and Kumho Industrial
Can any of the company-specific risk be diversified away by investing in both Haitai Confectionery and Kumho 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 Haitai Confectionery and Kumho Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haitai Confectionery Foods and Kumho Industrial Co, you can compare the effects of market volatilities on Haitai Confectionery and Kumho 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 Haitai Confectionery with a short position of Kumho Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haitai Confectionery and Kumho Industrial.
Diversification Opportunities for Haitai Confectionery and Kumho Industrial
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Haitai and Kumho is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Haitai Confectionery Foods and Kumho Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho Industrial and Haitai Confectionery 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 Haitai Confectionery Foods are associated (or correlated) with Kumho Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Industrial has no effect on the direction of Haitai Confectionery i.e., Haitai Confectionery and Kumho Industrial go up and down completely randomly.
Pair Corralation between Haitai Confectionery and Kumho Industrial
Assuming the 90 days trading horizon Haitai Confectionery Foods is expected to generate 0.86 times more return on investment than Kumho Industrial. However, Haitai Confectionery Foods is 1.16 times less risky than Kumho Industrial. It trades about 0.03 of its potential returns per unit of risk. Kumho Industrial Co is currently generating about -0.13 per unit of risk. If you would invest 578,000 in Haitai Confectionery Foods on August 31, 2024 and sell it today you would earn a total of 11,000 from holding Haitai Confectionery Foods or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haitai Confectionery Foods vs. Kumho Industrial Co
Performance |
| Timeline |
| Haitai Confectionery |
| Kumho Industrial |
Haitai Confectionery and Kumho Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haitai Confectionery and Kumho Industrial
The main advantage of trading using opposite Haitai Confectionery and Kumho Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haitai Confectionery position performs unexpectedly, Kumho 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 Kumho Industrial will offset losses from the drop in Kumho Industrial's long position.| Haitai Confectionery vs. SEOJEON ELECTRIC MACHINERY | Haitai Confectionery vs. Youngchang Chemical Co | Haitai Confectionery vs. Woorim Machinery Co | Haitai Confectionery vs. SH Energy Chemical |
| Kumho Industrial vs. Mobileleader CoLtd | Kumho Industrial vs. Nice Information Telecommunication | Kumho Industrial vs. SK Telecom Co | Kumho Industrial vs. Shinsegae Information Communication |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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