Correlation Between Chorokbaem Healthcare and Hyundai Rotem
Can any of the company-specific risk be diversified away by investing in both Chorokbaem Healthcare and Hyundai Rotem 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 Chorokbaem Healthcare and Hyundai Rotem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chorokbaem Healthcare Co and Hyundai Rotem Co, you can compare the effects of market volatilities on Chorokbaem Healthcare and Hyundai Rotem 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 Chorokbaem Healthcare with a short position of Hyundai Rotem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chorokbaem Healthcare and Hyundai Rotem.
Diversification Opportunities for Chorokbaem Healthcare and Hyundai Rotem
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chorokbaem and Hyundai is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Chorokbaem Healthcare Co and Hyundai Rotem Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Rotem and Chorokbaem Healthcare 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 Chorokbaem Healthcare Co are associated (or correlated) with Hyundai Rotem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Rotem has no effect on the direction of Chorokbaem Healthcare i.e., Chorokbaem Healthcare and Hyundai Rotem go up and down completely randomly.
Pair Corralation between Chorokbaem Healthcare and Hyundai Rotem
Assuming the 90 days trading horizon Chorokbaem Healthcare Co is expected to under-perform the Hyundai Rotem. But the stock apears to be less risky and, when comparing its historical volatility, Chorokbaem Healthcare Co is 1.28 times less risky than Hyundai Rotem. The stock trades about -0.04 of its potential returns per unit of risk. The Hyundai Rotem Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,579,922 in Hyundai Rotem Co on September 14, 2024 and sell it today you would earn a total of 2,410,078 from holding Hyundai Rotem Co or generate 93.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chorokbaem Healthcare Co vs. Hyundai Rotem Co
Performance |
| Timeline |
| Chorokbaem Healthcare |
| Hyundai Rotem |
Chorokbaem Healthcare and Hyundai Rotem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chorokbaem Healthcare and Hyundai Rotem
The main advantage of trading using opposite Chorokbaem Healthcare and Hyundai Rotem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chorokbaem Healthcare position performs unexpectedly, Hyundai Rotem 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 Hyundai Rotem will offset losses from the drop in Hyundai Rotem's long position.The idea behind Chorokbaem Healthcare Co and Hyundai Rotem 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.
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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