Correlation Between Hanjoo Light and Dongil Metal
Can any of the company-specific risk be diversified away by investing in both Hanjoo Light and Dongil Metal 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 Dongil Metal 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 Dongil Metal Co, you can compare the effects of market volatilities on Hanjoo Light and Dongil Metal 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 Dongil Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjoo Light and Dongil Metal.
Diversification Opportunities for Hanjoo Light and Dongil Metal
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hanjoo and Dongil is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Hanjoo Light Metal and Dongil Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongil Metal 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 Dongil Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongil Metal has no effect on the direction of Hanjoo Light i.e., Hanjoo Light and Dongil Metal go up and down completely randomly.
Pair Corralation between Hanjoo Light and Dongil Metal
Assuming the 90 days trading horizon Hanjoo Light Metal is expected to under-perform the Dongil Metal. In addition to that, Hanjoo Light is 3.07 times more volatile than Dongil Metal Co. It trades about -0.1 of its total potential returns per unit of risk. Dongil Metal Co is currently generating about -0.08 per unit of volatility. If you would invest 1,234,642 in Dongil Metal Co on August 28, 2024 and sell it today you would lose (394,642) from holding Dongil Metal Co or give up 31.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanjoo Light Metal vs. Dongil Metal Co
Performance |
| Timeline |
| Hanjoo Light Metal |
| Dongil Metal |
Hanjoo Light and Dongil Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjoo Light and Dongil Metal
The main advantage of trading using opposite Hanjoo Light and Dongil Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjoo Light position performs unexpectedly, Dongil Metal 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 Dongil Metal will offset losses from the drop in Dongil Metal'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 |
| Dongil Metal vs. LG Chemicals | Dongil Metal vs. Lotte Chemical Corp | Dongil Metal vs. Hyundai Steel | Dongil Metal vs. Seah Steel Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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