Correlation Between Hanjoo Light and TOPMATERIAL
Can any of the company-specific risk be diversified away by investing in both Hanjoo Light and TOPMATERIAL 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 TOPMATERIAL 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 TOPMATERIAL LTD, you can compare the effects of market volatilities on Hanjoo Light and TOPMATERIAL 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 TOPMATERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjoo Light and TOPMATERIAL.
Diversification Opportunities for Hanjoo Light and TOPMATERIAL
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hanjoo and TOPMATERIAL is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Hanjoo Light Metal and TOPMATERIAL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOPMATERIAL LTD 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 TOPMATERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOPMATERIAL LTD has no effect on the direction of Hanjoo Light i.e., Hanjoo Light and TOPMATERIAL go up and down completely randomly.
Pair Corralation between Hanjoo Light and TOPMATERIAL
Assuming the 90 days trading horizon Hanjoo Light Metal is expected to generate 0.81 times more return on investment than TOPMATERIAL. However, Hanjoo Light Metal is 1.24 times less risky than TOPMATERIAL. It trades about -0.52 of its potential returns per unit of risk. TOPMATERIAL LTD is currently generating about -0.47 per unit of risk. If you would invest 100,000 in Hanjoo Light Metal on September 5, 2024 and sell it today you would lose (22,000) from holding Hanjoo Light Metal or give up 22.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanjoo Light Metal vs. TOPMATERIAL LTD
Performance |
| Timeline |
| Hanjoo Light Metal |
| TOPMATERIAL LTD |
Hanjoo Light and TOPMATERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjoo Light and TOPMATERIAL
The main advantage of trading using opposite Hanjoo Light and TOPMATERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjoo Light position performs unexpectedly, TOPMATERIAL 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 TOPMATERIAL will offset losses from the drop in TOPMATERIAL'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 |
| TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. LG Energy Solution | TOPMATERIAL vs. SK Hynix |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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