Correlation Between Hana Materials and Hyunwoo Industrial
Can any of the company-specific risk be diversified away by investing in both Hana Materials 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 Hana Materials and Hyunwoo Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hana Materials and Hyunwoo Industrial Co, you can compare the effects of market volatilities on Hana Materials 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 Hana Materials with a short position of Hyunwoo Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hana Materials and Hyunwoo Industrial.
Diversification Opportunities for Hana Materials and Hyunwoo Industrial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hana and Hyunwoo is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hana Materials and Hyunwoo Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyunwoo Industrial and Hana Materials 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 Hana Materials 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 Hana Materials i.e., Hana Materials and Hyunwoo Industrial go up and down completely randomly.
Pair Corralation between Hana Materials and Hyunwoo Industrial
Assuming the 90 days trading horizon Hana Materials is expected to generate 1.9 times more return on investment than Hyunwoo Industrial. However, Hana Materials is 1.9 times more volatile than Hyunwoo Industrial Co. It trades about 0.17 of its potential returns per unit of risk. Hyunwoo Industrial Co is currently generating about 0.14 per unit of risk. If you would invest 2,415,000 in Hana Materials on October 25, 2024 and sell it today you would earn a total of 255,000 from holding Hana Materials or generate 10.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hana Materials vs. Hyunwoo Industrial Co
Performance |
| Timeline |
| Hana Materials |
| Hyunwoo Industrial |
Hana Materials and Hyunwoo Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hana Materials and Hyunwoo Industrial
The main advantage of trading using opposite Hana Materials and Hyunwoo Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hana Materials 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.| Hana Materials vs. SK Hynix | Hana Materials vs. LX Semicon Co | Hana Materials vs. Tokai Carbon Korea | Hana Materials vs. People Technology |
| Hyunwoo Industrial vs. SK Hynix | Hyunwoo Industrial vs. LX Semicon Co | Hyunwoo Industrial vs. Tokai Carbon Korea | Hyunwoo Industrial 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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