Correlation Between Itcen Co and Hana Materials
Can any of the company-specific risk be diversified away by investing in both Itcen Co and Hana Materials 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 Itcen Co and Hana Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Itcen Co and Hana Materials, you can compare the effects of market volatilities on Itcen Co and Hana Materials 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 Itcen Co with a short position of Hana Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itcen Co and Hana Materials.
Diversification Opportunities for Itcen Co and Hana Materials
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Itcen and Hana is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Itcen Co and Hana Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Materials and Itcen Co 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 Itcen Co are associated (or correlated) with Hana Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Materials has no effect on the direction of Itcen Co i.e., Itcen Co and Hana Materials go up and down completely randomly.
Pair Corralation between Itcen Co and Hana Materials
Assuming the 90 days trading horizon Itcen Co is expected to generate 1.37 times more return on investment than Hana Materials. However, Itcen Co is 1.37 times more volatile than Hana Materials. It trades about 0.07 of its potential returns per unit of risk. Hana Materials is currently generating about -0.25 per unit of risk. If you would invest 428,500 in Itcen Co on September 27, 2024 and sell it today you would earn a total of 117,500 from holding Itcen Co or generate 27.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.18% |
| Values | Daily Returns |
Itcen Co vs. Hana Materials
Performance |
| Timeline |
| Itcen Co |
| Hana Materials |
Itcen Co and Hana Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itcen Co and Hana Materials
The main advantage of trading using opposite Itcen Co and Hana Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itcen Co position performs unexpectedly, Hana Materials 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 Hana Materials will offset losses from the drop in Hana Materials' long position.| Itcen Co vs. Hana Materials | Itcen Co vs. Daelim Trading Co | Itcen Co vs. EV Advanced Material | Itcen Co vs. DSC Investment |
| Hana Materials vs. SK Hynix | Hana Materials vs. LX Semicon Co | Hana Materials vs. Tokai Carbon Korea | Hana Materials vs. People Technology |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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