Correlation Between Humax and ISU Chemical
Can any of the company-specific risk be diversified away by investing in both Humax and ISU Chemical 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 Humax and ISU Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humax Co and ISU Chemical Co, you can compare the effects of market volatilities on Humax and ISU Chemical 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 Humax with a short position of ISU Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humax and ISU Chemical.
Diversification Opportunities for Humax and ISU Chemical
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Humax and ISU is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Humax Co and ISU Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISU Chemical and Humax 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 Humax Co are associated (or correlated) with ISU Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISU Chemical has no effect on the direction of Humax i.e., Humax and ISU Chemical go up and down completely randomly.
Pair Corralation between Humax and ISU Chemical
Assuming the 90 days trading horizon Humax Co is expected to under-perform the ISU Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Humax Co is 1.13 times less risky than ISU Chemical. The stock trades about -0.55 of its potential returns per unit of risk. The ISU Chemical Co is currently generating about -0.24 of returns per unit of risk over similar time horizon. If you would invest 767,000 in ISU Chemical Co on September 13, 2024 and sell it today you would lose (147,000) from holding ISU Chemical Co or give up 19.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humax Co vs. ISU Chemical Co
Performance |
| Timeline |
| Humax |
| ISU Chemical |
Humax and ISU Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humax and ISU Chemical
The main advantage of trading using opposite Humax and ISU Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humax position performs unexpectedly, ISU Chemical 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 ISU Chemical will offset losses from the drop in ISU Chemical's long position.The idea behind Humax Co and ISU Chemical Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ISU Chemical vs. Atinum Investment Co | ISU Chemical vs. CJ Seafood Corp | ISU Chemical vs. KTB Investment Securities | ISU Chemical vs. Daol Investment Securities |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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