Correlation Between Hanjoo Light and FNSTech
Can any of the company-specific risk be diversified away by investing in both Hanjoo Light and FNSTech 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 FNSTech 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 FNSTech Co, you can compare the effects of market volatilities on Hanjoo Light and FNSTech 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 FNSTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjoo Light and FNSTech.
Diversification Opportunities for Hanjoo Light and FNSTech
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanjoo and FNSTech is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hanjoo Light Metal and FNSTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNSTech 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 FNSTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNSTech has no effect on the direction of Hanjoo Light i.e., Hanjoo Light and FNSTech go up and down completely randomly.
Pair Corralation between Hanjoo Light and FNSTech
Assuming the 90 days trading horizon Hanjoo Light Metal is expected to under-perform the FNSTech. But the stock apears to be less risky and, when comparing its historical volatility, Hanjoo Light Metal is 1.67 times less risky than FNSTech. The stock trades about -0.14 of its potential returns per unit of risk. The FNSTech Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 987,000 in FNSTech Co on October 18, 2024 and sell it today you would lose (71,000) from holding FNSTech Co or give up 7.19% 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. FNSTech Co
Performance |
| Timeline |
| Hanjoo Light Metal |
| FNSTech |
Hanjoo Light and FNSTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjoo Light and FNSTech
The main advantage of trading using opposite Hanjoo Light and FNSTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjoo Light position performs unexpectedly, FNSTech 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 FNSTech will offset losses from the drop in FNSTech's long position.| Hanjoo Light vs. Daishin Information Communications | Hanjoo Light vs. Lotte Non Life Insurance | Hanjoo Light vs. Sangsin Energy Display | Hanjoo Light vs. Display Tech Co |
| FNSTech vs. Jeju Beer Co | FNSTech vs. Innowireless Co | FNSTech vs. Korean Drug Co | FNSTech vs. Hanjoo Light Metal |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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