Correlation Between Hanjoo Light and Kumho Industrial
Can any of the company-specific risk be diversified away by investing in both Hanjoo Light and Kumho 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 Hanjoo Light and Kumho Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanjoo Light Metal and Kumho Industrial Co, you can compare the effects of market volatilities on Hanjoo Light and Kumho 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 Hanjoo Light with a short position of Kumho Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjoo Light and Kumho Industrial.
Diversification Opportunities for Hanjoo Light and Kumho Industrial
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanjoo and Kumho is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Hanjoo Light Metal and Kumho Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho Industrial and Hanjoo Light 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 Hanjoo Light Metal are associated (or correlated) with Kumho Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Industrial has no effect on the direction of Hanjoo Light i.e., Hanjoo Light and Kumho Industrial go up and down completely randomly.
Pair Corralation between Hanjoo Light and Kumho Industrial
Assuming the 90 days trading horizon Hanjoo Light Metal is expected to under-perform the Kumho Industrial. In addition to that, Hanjoo Light is 2.08 times more volatile than Kumho Industrial Co. It trades about -0.11 of its total potential returns per unit of risk. Kumho Industrial Co is currently generating about -0.14 per unit of volatility. If you would invest 558,000 in Kumho Industrial Co on September 4, 2024 and sell it today you would lose (265,000) from holding Kumho Industrial Co or give up 47.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanjoo Light Metal vs. Kumho Industrial Co
Performance |
| Timeline |
| Hanjoo Light Metal |
| Kumho Industrial |
Hanjoo Light and Kumho Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjoo Light and Kumho Industrial
The main advantage of trading using opposite Hanjoo Light and Kumho Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjoo Light position performs unexpectedly, Kumho 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 Kumho Industrial will offset losses from the drop in Kumho Industrial's long position.| Hanjoo Light vs. Samsung Electronics Co | Hanjoo Light vs. Samsung Electronics Co | Hanjoo Light vs. LG Energy Solution | Hanjoo Light vs. SK Hynix |
| Kumho Industrial vs. AptaBio Therapeutics | Kumho Industrial vs. Daewoo SBI SPAC | Kumho Industrial vs. Dream Security co | Kumho Industrial vs. Microfriend |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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