Correlation Between Hanjoo Light and RF Materials
Can any of the company-specific risk be diversified away by investing in both Hanjoo Light and RF Materials 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 RF Materials 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 RF Materials Co, you can compare the effects of market volatilities on Hanjoo Light and RF Materials 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 RF Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjoo Light and RF Materials.
Diversification Opportunities for Hanjoo Light and RF Materials
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanjoo and 327260 is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hanjoo Light Metal and RF Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Materials 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 RF Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Materials has no effect on the direction of Hanjoo Light i.e., Hanjoo Light and RF Materials go up and down completely randomly.
Pair Corralation between Hanjoo Light and RF Materials
Assuming the 90 days trading horizon Hanjoo Light Metal is expected to under-perform the RF Materials. But the stock apears to be less risky and, when comparing its historical volatility, Hanjoo Light Metal is 2.05 times less risky than RF Materials. The stock trades about -0.52 of its potential returns per unit of risk. The RF Materials Co is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest 658,000 in RF Materials Co on September 5, 2024 and sell it today you would lose (126,000) from holding RF Materials Co or give up 19.15% 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. RF Materials Co
Performance |
| Timeline |
| Hanjoo Light Metal |
| RF Materials |
Hanjoo Light and RF Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjoo Light and RF Materials
The main advantage of trading using opposite Hanjoo Light and RF Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjoo Light position performs unexpectedly, RF Materials 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 RF Materials will offset losses from the drop in RF Materials' 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 |
| RF Materials vs. SK Hynix | RF Materials vs. LX Semicon Co | RF Materials vs. Tokai Carbon Korea | RF Materials vs. People Technology |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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