Correlation Between Incar Financial and Hankook Furniture
Can any of the company-specific risk be diversified away by investing in both Incar Financial and Hankook Furniture 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 Incar Financial and Hankook Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Incar Financial Service and Hankook Furniture Co, you can compare the effects of market volatilities on Incar Financial and Hankook Furniture 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 Incar Financial with a short position of Hankook Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Incar Financial and Hankook Furniture.
Diversification Opportunities for Incar Financial and Hankook Furniture
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Incar and Hankook is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Incar Financial Service and Hankook Furniture Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankook Furniture and Incar Financial 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 Incar Financial Service are associated (or correlated) with Hankook Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankook Furniture has no effect on the direction of Incar Financial i.e., Incar Financial and Hankook Furniture go up and down completely randomly.
Pair Corralation between Incar Financial and Hankook Furniture
Assuming the 90 days trading horizon Incar Financial Service is expected to generate 2.1 times more return on investment than Hankook Furniture. However, Incar Financial is 2.1 times more volatile than Hankook Furniture Co. It trades about 0.21 of its potential returns per unit of risk. Hankook Furniture Co is currently generating about 0.23 per unit of risk. If you would invest 539,000 in Incar Financial Service on September 1, 2024 and sell it today you would earn a total of 104,000 from holding Incar Financial Service or generate 19.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Incar Financial Service vs. Hankook Furniture Co
Performance |
| Timeline |
| Incar Financial Service |
| Hankook Furniture |
Incar Financial and Hankook Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Incar Financial and Hankook Furniture
The main advantage of trading using opposite Incar Financial and Hankook Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Incar Financial position performs unexpectedly, Hankook Furniture 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 Hankook Furniture will offset losses from the drop in Hankook Furniture's long position.| Incar Financial vs. Busan Industrial Co | Incar Financial vs. Busan Ind | Incar Financial vs. Mirae Asset Daewoo | Incar Financial vs. Finebesteel |
| Hankook Furniture vs. LG Display | Hankook Furniture vs. Hyundai Motor | Hankook Furniture vs. Hyundai Motor Co | Hankook Furniture vs. Hyundai Motor 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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