Correlation Between Hanjoo Light and Organic Tea
Can any of the company-specific risk be diversified away by investing in both Hanjoo Light and Organic Tea 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 Organic Tea 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 Organic Tea Cosmetics, you can compare the effects of market volatilities on Hanjoo Light and Organic Tea 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 Organic Tea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjoo Light and Organic Tea.
Diversification Opportunities for Hanjoo Light and Organic Tea
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanjoo and Organic is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hanjoo Light Metal and Organic Tea Cosmetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Organic Tea Cosmetics 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 Organic Tea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Organic Tea Cosmetics has no effect on the direction of Hanjoo Light i.e., Hanjoo Light and Organic Tea go up and down completely randomly.
Pair Corralation between Hanjoo Light and Organic Tea
Assuming the 90 days trading horizon Hanjoo Light Metal is expected to under-perform the Organic Tea. But the stock apears to be less risky and, when comparing its historical volatility, Hanjoo Light Metal is 1.29 times less risky than Organic Tea. The stock trades about -0.14 of its potential returns per unit of risk. The Organic Tea Cosmetics is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 13,600 in Organic Tea Cosmetics on September 5, 2024 and sell it today you would lose (6,800) from holding Organic Tea Cosmetics or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.18% |
| Values | Daily Returns |
Hanjoo Light Metal vs. Organic Tea Cosmetics
Performance |
| Timeline |
| Hanjoo Light Metal |
| Organic Tea Cosmetics |
Hanjoo Light and Organic Tea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjoo Light and Organic Tea
The main advantage of trading using opposite Hanjoo Light and Organic Tea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjoo Light position performs unexpectedly, Organic Tea 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 Organic Tea will offset losses from the drop in Organic Tea'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 |
| Organic Tea vs. Hwangkum Steel Technology | Organic Tea vs. Eagle Veterinary Technology | Organic Tea vs. Dongwon Metal Co | Organic Tea vs. Hanjoo Light Metal |
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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