Correlation Between Hanjoo Light and Coloray International
Can any of the company-specific risk be diversified away by investing in both Hanjoo Light and Coloray International 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 Coloray International 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 Coloray International Investment, you can compare the effects of market volatilities on Hanjoo Light and Coloray International 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 Coloray International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjoo Light and Coloray International.
Diversification Opportunities for Hanjoo Light and Coloray International
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanjoo and Coloray is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hanjoo Light Metal and Coloray International Investme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloray International 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 Coloray International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coloray International has no effect on the direction of Hanjoo Light i.e., Hanjoo Light and Coloray International go up and down completely randomly.
Pair Corralation between Hanjoo Light and Coloray International
Assuming the 90 days trading horizon Hanjoo Light Metal is expected to under-perform the Coloray International. But the stock apears to be less risky and, when comparing its historical volatility, Hanjoo Light Metal is 1.55 times less risky than Coloray International. The stock trades about -0.22 of its potential returns per unit of risk. The Coloray International Investment is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 65,100 in Coloray International Investment on August 25, 2024 and sell it today you would lose (5,100) from holding Coloray International Investment or give up 7.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanjoo Light Metal vs. Coloray International Investme
Performance |
| Timeline |
| Hanjoo Light Metal |
| Coloray International |
Hanjoo Light and Coloray International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjoo Light and Coloray International
The main advantage of trading using opposite Hanjoo Light and Coloray International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjoo Light position performs unexpectedly, Coloray International 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 Coloray International will offset losses from the drop in Coloray International's long position.| Hanjoo Light vs. Jeju Air Co | Hanjoo Light vs. Bohae Brewery | Hanjoo Light vs. InfoBank | Hanjoo Light vs. Lotte Non Life Insurance |
| Coloray International vs. Taeyang Metal Industrial | Coloray International vs. Haitai Confectionery Foods | Coloray International vs. Namhwa Industrial Co | Coloray International vs. Seoyon Topmetal Co |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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