Correlation Between Hanjoo Light and Neo Cremar
Can any of the company-specific risk be diversified away by investing in both Hanjoo Light and Neo Cremar 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 Neo Cremar 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 Neo Cremar Co, you can compare the effects of market volatilities on Hanjoo Light and Neo Cremar 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 Neo Cremar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjoo Light and Neo Cremar.
Diversification Opportunities for Hanjoo Light and Neo Cremar
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanjoo and Neo is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Hanjoo Light Metal and Neo Cremar Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Cremar 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 Neo Cremar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Cremar has no effect on the direction of Hanjoo Light i.e., Hanjoo Light and Neo Cremar go up and down completely randomly.
Pair Corralation between Hanjoo Light and Neo Cremar
Assuming the 90 days trading horizon Hanjoo Light Metal is expected to under-perform the Neo Cremar. In addition to that, Hanjoo Light is 1.45 times more volatile than Neo Cremar Co. It trades about -0.1 of its total potential returns per unit of risk. Neo Cremar Co is currently generating about 0.02 per unit of volatility. If you would invest 628,000 in Neo Cremar Co on November 3, 2024 and sell it today you would earn a total of 32,000 from holding Neo Cremar Co or generate 5.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanjoo Light Metal vs. Neo Cremar Co
Performance |
| Timeline |
| Hanjoo Light Metal |
| Neo Cremar |
Hanjoo Light and Neo Cremar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjoo Light and Neo Cremar
The main advantage of trading using opposite Hanjoo Light and Neo Cremar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjoo Light position performs unexpectedly, Neo Cremar 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 Neo Cremar will offset losses from the drop in Neo Cremar's long position.| Hanjoo Light vs. Lake Materials Co | Hanjoo Light vs. DSC Investment | Hanjoo Light vs. Korea Investment Holdings | Hanjoo Light vs. EBEST Investment Securities |
| Neo Cremar vs. Samsung Life Insurance | Neo Cremar vs. Sejong Telecom | Neo Cremar vs. SK Telecom Co | Neo Cremar vs. Settlebank |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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