Correlation Between Hironic Co and Kwang Jin
Can any of the company-specific risk be diversified away by investing in both Hironic Co and Kwang Jin 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 Hironic Co and Kwang Jin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hironic Co and Kwang Jin Ind, you can compare the effects of market volatilities on Hironic Co and Kwang Jin 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 Hironic Co with a short position of Kwang Jin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hironic Co and Kwang Jin.
Diversification Opportunities for Hironic Co and Kwang Jin
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hironic and Kwang is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hironic Co and Kwang Jin Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kwang Jin Ind and Hironic 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 Hironic Co are associated (or correlated) with Kwang Jin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kwang Jin Ind has no effect on the direction of Hironic Co i.e., Hironic Co and Kwang Jin go up and down completely randomly.
Pair Corralation between Hironic Co and Kwang Jin
Assuming the 90 days trading horizon Hironic Co is expected to generate 1.97 times more return on investment than Kwang Jin. However, Hironic Co is 1.97 times more volatile than Kwang Jin Ind. It trades about -0.03 of its potential returns per unit of risk. Kwang Jin Ind is currently generating about -0.12 per unit of risk. If you would invest 707,000 in Hironic Co on September 26, 2024 and sell it today you would lose (77,000) from holding Hironic Co or give up 10.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hironic Co vs. Kwang Jin Ind
Performance |
| Timeline |
| Hironic Co |
| Kwang Jin Ind |
Hironic Co and Kwang Jin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hironic Co and Kwang Jin
The main advantage of trading using opposite Hironic Co and Kwang Jin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hironic Co position performs unexpectedly, Kwang Jin 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 Kwang Jin will offset losses from the drop in Kwang Jin's long position.The idea behind Hironic Co and Kwang Jin Ind 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.| Kwang Jin vs. Wonil Special Steel | Kwang Jin vs. Bookook Steel | Kwang Jin vs. Kyeryong Construction Industrial | Kwang Jin vs. Hironic 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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