Correlation Between Cheryong Industrial and Hyunwoo Industrial
Can any of the company-specific risk be diversified away by investing in both Cheryong Industrial and Hyunwoo Industrial 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 Cheryong Industrial and Hyunwoo Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheryong Industrial CoLtd and Hyunwoo Industrial Co, you can compare the effects of market volatilities on Cheryong Industrial and Hyunwoo Industrial 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 Cheryong Industrial with a short position of Hyunwoo Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheryong Industrial and Hyunwoo Industrial.
Diversification Opportunities for Cheryong Industrial and Hyunwoo Industrial
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cheryong and Hyunwoo is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial CoLtd and Hyunwoo Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyunwoo Industrial and Cheryong Industrial 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 Cheryong Industrial CoLtd are associated (or correlated) with Hyunwoo Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyunwoo Industrial has no effect on the direction of Cheryong Industrial i.e., Cheryong Industrial and Hyunwoo Industrial go up and down completely randomly.
Pair Corralation between Cheryong Industrial and Hyunwoo Industrial
Assuming the 90 days trading horizon Cheryong Industrial CoLtd is expected to under-perform the Hyunwoo Industrial. In addition to that, Cheryong Industrial is 1.56 times more volatile than Hyunwoo Industrial Co. It trades about -0.09 of its total potential returns per unit of risk. Hyunwoo Industrial Co is currently generating about -0.14 per unit of volatility. If you would invest 283,000 in Hyunwoo Industrial Co on August 29, 2024 and sell it today you would lose (20,000) from holding Hyunwoo Industrial Co or give up 7.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheryong Industrial CoLtd vs. Hyunwoo Industrial Co
Performance |
| Timeline |
| Cheryong Industrial CoLtd |
| Hyunwoo Industrial |
Cheryong Industrial and Hyunwoo Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheryong Industrial and Hyunwoo Industrial
The main advantage of trading using opposite Cheryong Industrial and Hyunwoo Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheryong Industrial position performs unexpectedly, Hyunwoo Industrial 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 Hyunwoo Industrial will offset losses from the drop in Hyunwoo Industrial's long position.| Cheryong Industrial vs. Lion Chemtech Co | Cheryong Industrial vs. Kuk Young GM | Cheryong Industrial vs. Nature and Environment | Cheryong Industrial vs. IL Science Co |
| Hyunwoo Industrial vs. SK Hynix | Hyunwoo Industrial vs. LX Semicon Co | Hyunwoo Industrial vs. People Technology | Hyunwoo Industrial vs. Hana Materials |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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