Correlation Between HuMC and UNISEM
Can any of the company-specific risk be diversified away by investing in both HuMC and UNISEM 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 HuMC and UNISEM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HuMC Co and UNISEM Co, you can compare the effects of market volatilities on HuMC and UNISEM 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 HuMC with a short position of UNISEM. Check out your portfolio center. Please also check ongoing floating volatility patterns of HuMC and UNISEM.
Diversification Opportunities for HuMC and UNISEM
Poor diversification
The 3 months correlation between HuMC and UNISEM is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding HuMC Co and UNISEM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNISEM and HuMC 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 HuMC Co are associated (or correlated) with UNISEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNISEM has no effect on the direction of HuMC i.e., HuMC and UNISEM go up and down completely randomly.
Pair Corralation between HuMC and UNISEM
Assuming the 90 days trading horizon HuMC Co is expected to generate 0.35 times more return on investment than UNISEM. However, HuMC Co is 2.88 times less risky than UNISEM. It trades about -0.15 of its potential returns per unit of risk. UNISEM Co is currently generating about -0.27 per unit of risk. If you would invest 102,000 in HuMC Co on September 1, 2024 and sell it today you would lose (2,800) from holding HuMC Co or give up 2.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
HuMC Co vs. UNISEM Co
Performance |
| Timeline |
| HuMC |
| UNISEM |
HuMC and UNISEM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HuMC and UNISEM
The main advantage of trading using opposite HuMC and UNISEM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HuMC position performs unexpectedly, UNISEM 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 UNISEM will offset losses from the drop in UNISEM's long position.| HuMC vs. CKH Food Health | HuMC vs. Raontech | HuMC vs. Eagle Veterinary Technology | HuMC vs. LG Household Healthcare |
| UNISEM vs. Shinsegae Information Communication | UNISEM vs. Dongbu Insurance Co | UNISEM vs. Daejoo Electronic Materials | UNISEM vs. Shinil Electronics 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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