Correlation Between Hanjoo Light and ISU Chemical
Can any of the company-specific risk be diversified away by investing in both Hanjoo Light and ISU Chemical 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 ISU Chemical 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 ISU Chemical Co, you can compare the effects of market volatilities on Hanjoo Light and ISU Chemical 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 ISU Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjoo Light and ISU Chemical.
Diversification Opportunities for Hanjoo Light and ISU Chemical
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hanjoo and ISU is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Hanjoo Light Metal and ISU Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISU Chemical 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 ISU Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISU Chemical has no effect on the direction of Hanjoo Light i.e., Hanjoo Light and ISU Chemical go up and down completely randomly.
Pair Corralation between Hanjoo Light and ISU Chemical
Assuming the 90 days trading horizon Hanjoo Light is expected to generate 1.61 times less return on investment than ISU Chemical. But when comparing it to its historical volatility, Hanjoo Light Metal is 2.75 times less risky than ISU Chemical. It trades about 0.18 of its potential returns per unit of risk. ISU Chemical Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 604,000 in ISU Chemical Co on November 3, 2024 and sell it today you would earn a total of 34,000 from holding ISU Chemical Co or generate 5.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanjoo Light Metal vs. ISU Chemical Co
Performance |
| Timeline |
| Hanjoo Light Metal |
| ISU Chemical |
Hanjoo Light and ISU Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjoo Light and ISU Chemical
The main advantage of trading using opposite Hanjoo Light and ISU Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjoo Light position performs unexpectedly, ISU Chemical 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 ISU Chemical will offset losses from the drop in ISU Chemical's long position.| Hanjoo Light vs. Samyoung Electronics Co | Hanjoo Light vs. SungMoon Electronics Co | Hanjoo Light vs. Vissem Electronics Co | Hanjoo Light vs. Sungmoon Electronics Co |
| ISU Chemical vs. AptaBio Therapeutics | ISU Chemical vs. Daewoo SBI SPAC | ISU Chemical vs. Dream Security co | ISU Chemical 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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