Correlation Between INNOX Advanced and Hana Materials
Can any of the company-specific risk be diversified away by investing in both INNOX Advanced and Hana Materials 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 INNOX Advanced and Hana Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INNOX Advanced Materials and Hana Materials, you can compare the effects of market volatilities on INNOX Advanced and Hana Materials 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 INNOX Advanced with a short position of Hana Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of INNOX Advanced and Hana Materials.
Diversification Opportunities for INNOX Advanced and Hana Materials
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between INNOX and Hana is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding INNOX Advanced Materials and Hana Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Materials and INNOX Advanced 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 INNOX Advanced Materials are associated (or correlated) with Hana Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Materials has no effect on the direction of INNOX Advanced i.e., INNOX Advanced and Hana Materials go up and down completely randomly.
Pair Corralation between INNOX Advanced and Hana Materials
Assuming the 90 days trading horizon INNOX Advanced Materials is expected to generate 0.94 times more return on investment than Hana Materials. However, INNOX Advanced Materials is 1.06 times less risky than Hana Materials. It trades about -0.06 of its potential returns per unit of risk. Hana Materials is currently generating about -0.31 per unit of risk. If you would invest 2,355,000 in INNOX Advanced Materials on August 29, 2024 and sell it today you would lose (90,000) from holding INNOX Advanced Materials or give up 3.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
INNOX Advanced Materials vs. Hana Materials
Performance |
| Timeline |
| INNOX Advanced Materials |
| Hana Materials |
INNOX Advanced and Hana Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INNOX Advanced and Hana Materials
The main advantage of trading using opposite INNOX Advanced and Hana Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INNOX Advanced position performs unexpectedly, Hana Materials 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 Hana Materials will offset losses from the drop in Hana Materials' long position.| INNOX Advanced vs. Clean Science co | INNOX Advanced vs. KIWI Media Group | INNOX Advanced vs. Barunson Entertainment Arts | INNOX Advanced vs. JYP Entertainment Corp |
| Hana Materials vs. Air Busan Co | Hana Materials vs. Daelim Trading Co | Hana Materials vs. Korea Air Svc | Hana Materials vs. SBI Investment KOREA |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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