Correlation Between Humax and Korea New
Can any of the company-specific risk be diversified away by investing in both Humax and Korea New 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 Korea New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humax Co and Korea New Network, you can compare the effects of market volatilities on Humax and Korea New 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 Korea New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humax and Korea New.
Diversification Opportunities for Humax and Korea New
Very good diversification
The 3 months correlation between Humax and Korea is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Humax Co and Korea New Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea New Network 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 Korea New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea New Network has no effect on the direction of Humax i.e., Humax and Korea New go up and down completely randomly.
Pair Corralation between Humax and Korea New
Assuming the 90 days trading horizon Humax Co is expected to under-perform the Korea New. But the stock apears to be less risky and, when comparing its historical volatility, Humax Co is 1.02 times less risky than Korea New. The stock trades about -0.58 of its potential returns per unit of risk. The Korea New Network is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 78,000 in Korea New Network on September 12, 2024 and sell it today you would earn a total of 12,600 from holding Korea New Network or generate 16.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humax Co vs. Korea New Network
Performance |
| Timeline |
| Humax |
| Korea New Network |
Humax and Korea New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humax and Korea New
The main advantage of trading using opposite Humax and Korea New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humax position performs unexpectedly, Korea New 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 Korea New will offset losses from the drop in Korea New's long position.The idea behind Humax Co and Korea New Network 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.| Korea New vs. BGF Retail Co | Korea New vs. LG Display Co | Korea New vs. Grand Korea Leisure | Korea New vs. Lake Materials Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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