Correlation Between Handok Clean and Songwon Industrial
Can any of the company-specific risk be diversified away by investing in both Handok Clean and Songwon Industrial 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 Handok Clean and Songwon Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Handok Clean Tech and Songwon Industrial Co, you can compare the effects of market volatilities on Handok Clean and Songwon Industrial 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 Handok Clean with a short position of Songwon Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Handok Clean and Songwon Industrial.
Diversification Opportunities for Handok Clean and Songwon Industrial
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Handok and Songwon is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Handok Clean Tech and Songwon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Songwon Industrial and Handok Clean 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 Handok Clean Tech are associated (or correlated) with Songwon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Songwon Industrial has no effect on the direction of Handok Clean i.e., Handok Clean and Songwon Industrial go up and down completely randomly.
Pair Corralation between Handok Clean and Songwon Industrial
Assuming the 90 days trading horizon Handok Clean Tech is expected to generate 0.56 times more return on investment than Songwon Industrial. However, Handok Clean Tech is 1.8 times less risky than Songwon Industrial. It trades about -0.01 of its potential returns per unit of risk. Songwon Industrial Co is currently generating about -0.04 per unit of risk. If you would invest 645,291 in Handok Clean Tech on October 29, 2024 and sell it today you would lose (11,291) from holding Handok Clean Tech or give up 1.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Handok Clean Tech vs. Songwon Industrial Co
Performance |
| Timeline |
| Handok Clean Tech |
| Songwon Industrial |
Handok Clean and Songwon Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Handok Clean and Songwon Industrial
The main advantage of trading using opposite Handok Clean and Songwon Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Handok Clean position performs unexpectedly, Songwon Industrial 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 Songwon Industrial will offset losses from the drop in Songwon Industrial's long position.| Handok Clean vs. Daehan Steel | Handok Clean vs. Daechang Steel Co | Handok Clean vs. Nature and Environment | Handok Clean vs. Seah Steel Corp |
| Songwon Industrial vs. Grand Korea Leisure | Songwon Industrial vs. Iljin Display | Songwon Industrial vs. Korean Reinsurance Co | Songwon Industrial vs. Nasmedia 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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