Correlation Between Hanjoo Light and IM CoLtd
Can any of the company-specific risk be diversified away by investing in both Hanjoo Light and IM CoLtd 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 IM CoLtd 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 IM CoLtd, you can compare the effects of market volatilities on Hanjoo Light and IM CoLtd 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 IM CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjoo Light and IM CoLtd.
Diversification Opportunities for Hanjoo Light and IM CoLtd
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanjoo and 101390 is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hanjoo Light Metal and IM CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IM CoLtd 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 IM CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IM CoLtd has no effect on the direction of Hanjoo Light i.e., Hanjoo Light and IM CoLtd go up and down completely randomly.
Pair Corralation between Hanjoo Light and IM CoLtd
Assuming the 90 days trading horizon Hanjoo Light Metal is expected to under-perform the IM CoLtd. But the stock apears to be less risky and, when comparing its historical volatility, Hanjoo Light Metal is 1.63 times less risky than IM CoLtd. The stock trades about -0.33 of its potential returns per unit of risk. The IM CoLtd is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 330,000 in IM CoLtd on August 29, 2024 and sell it today you would lose (41,500) from holding IM CoLtd or give up 12.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanjoo Light Metal vs. IM CoLtd
Performance |
| Timeline |
| Hanjoo Light Metal |
| IM CoLtd |
Hanjoo Light and IM CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjoo Light and IM CoLtd
The main advantage of trading using opposite Hanjoo Light and IM CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjoo Light position performs unexpectedly, IM CoLtd 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 IM CoLtd will offset losses from the drop in IM CoLtd'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 |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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