Correlation Between Hanjoo Light and Insung Information
Can any of the company-specific risk be diversified away by investing in both Hanjoo Light and Insung Information 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 Insung Information 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 Insung Information Co, you can compare the effects of market volatilities on Hanjoo Light and Insung Information 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 Insung Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjoo Light and Insung Information.
Diversification Opportunities for Hanjoo Light and Insung Information
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanjoo and Insung is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Hanjoo Light Metal and Insung Information Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insung Information 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 Insung Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insung Information has no effect on the direction of Hanjoo Light i.e., Hanjoo Light and Insung Information go up and down completely randomly.
Pair Corralation between Hanjoo Light and Insung Information
Assuming the 90 days trading horizon Hanjoo Light Metal is expected to under-perform the Insung Information. But the stock apears to be less risky and, when comparing its historical volatility, Hanjoo Light Metal is 1.21 times less risky than Insung Information. The stock trades about -0.33 of its potential returns per unit of risk. The Insung Information Co is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 205,000 in Insung Information Co on August 28, 2024 and sell it today you would lose (12,200) from holding Insung Information Co or give up 5.95% 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. Insung Information Co
Performance |
| Timeline |
| Hanjoo Light Metal |
| Insung Information |
Hanjoo Light and Insung Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjoo Light and Insung Information
The main advantage of trading using opposite Hanjoo Light and Insung Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjoo Light position performs unexpectedly, Insung Information 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 Insung Information will offset losses from the drop in Insung Information'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 |
| Insung Information vs. Korea Real Estate | Insung Information vs. Korea Ratings Co | Insung Information vs. IQuest Co | Insung Information vs. Wonbang Tech 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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