Correlation Between Hanjoo Light and KakaoBank Corp
Can any of the company-specific risk be diversified away by investing in both Hanjoo Light and KakaoBank Corp 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 KakaoBank Corp 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 KakaoBank Corp, you can compare the effects of market volatilities on Hanjoo Light and KakaoBank Corp 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 KakaoBank Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjoo Light and KakaoBank Corp.
Diversification Opportunities for Hanjoo Light and KakaoBank Corp
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hanjoo and KakaoBank is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Hanjoo Light Metal and KakaoBank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KakaoBank Corp 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 KakaoBank Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KakaoBank Corp has no effect on the direction of Hanjoo Light i.e., Hanjoo Light and KakaoBank Corp go up and down completely randomly.
Pair Corralation between Hanjoo Light and KakaoBank Corp
Assuming the 90 days trading horizon Hanjoo Light Metal is expected to under-perform the KakaoBank Corp. But the stock apears to be less risky and, when comparing its historical volatility, Hanjoo Light Metal is 1.11 times less risky than KakaoBank Corp. The stock trades about -0.12 of its potential returns per unit of risk. The KakaoBank Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,025,000 in KakaoBank Corp on October 16, 2024 and sell it today you would earn a total of 85,000 from holding KakaoBank Corp or generate 4.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanjoo Light Metal vs. KakaoBank Corp
Performance |
| Timeline |
| Hanjoo Light Metal |
| KakaoBank Corp |
Hanjoo Light and KakaoBank Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjoo Light and KakaoBank Corp
The main advantage of trading using opposite Hanjoo Light and KakaoBank Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjoo Light position performs unexpectedly, KakaoBank Corp 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 KakaoBank Corp will offset losses from the drop in KakaoBank Corp's long position.| Hanjoo Light vs. Samyung Trading Co | Hanjoo Light vs. Lotte Rental Co | Hanjoo Light vs. Hyundai Green Food | Hanjoo Light vs. KTB Investment Securities |
| KakaoBank Corp vs. Hanjoo Light Metal | KakaoBank Corp vs. PJ Metal Co | KakaoBank Corp vs. DONGKUK TED METAL | KakaoBank Corp vs. Korea Air Svc |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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