Correlation Between Haitai Confectionery and Lee Ku
Can any of the company-specific risk be diversified away by investing in both Haitai Confectionery and Lee Ku 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 Lee Ku 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 Lee Ku Industrial, you can compare the effects of market volatilities on Haitai Confectionery and Lee Ku 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 Lee Ku. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haitai Confectionery and Lee Ku.
Diversification Opportunities for Haitai Confectionery and Lee Ku
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Haitai and Lee is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Haitai Confectionery Foods and Lee Ku Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lee Ku 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 Lee Ku. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lee Ku Industrial has no effect on the direction of Haitai Confectionery i.e., Haitai Confectionery and Lee Ku go up and down completely randomly.
Pair Corralation between Haitai Confectionery and Lee Ku
Assuming the 90 days trading horizon Haitai Confectionery Foods is expected to under-perform the Lee Ku. But the stock apears to be less risky and, when comparing its historical volatility, Haitai Confectionery Foods is 1.2 times less risky than Lee Ku. The stock trades about -0.07 of its potential returns per unit of risk. The Lee Ku Industrial is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 524,000 in Lee Ku Industrial on October 17, 2024 and sell it today you would lose (90,000) from holding Lee Ku Industrial or give up 17.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haitai Confectionery Foods vs. Lee Ku Industrial
Performance |
| Timeline |
| Haitai Confectionery |
| Lee Ku Industrial |
Haitai Confectionery and Lee Ku Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haitai Confectionery and Lee Ku
The main advantage of trading using opposite Haitai Confectionery and Lee Ku positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haitai Confectionery position performs unexpectedly, Lee Ku 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 Lee Ku will offset losses from the drop in Lee Ku's long position.| Haitai Confectionery vs. DB Insurance Co | Haitai Confectionery vs. Korea Information Communications | Haitai Confectionery vs. InfoBank | Haitai Confectionery vs. Ssangyong Information Communication |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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