Correlation Between INNOX Advanced and Hanjoo Light
Can any of the company-specific risk be diversified away by investing in both INNOX Advanced and Hanjoo Light 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 Hanjoo Light 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 Hanjoo Light Metal, you can compare the effects of market volatilities on INNOX Advanced and Hanjoo Light 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 Hanjoo Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of INNOX Advanced and Hanjoo Light.
Diversification Opportunities for INNOX Advanced and Hanjoo Light
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INNOX and Hanjoo is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding INNOX Advanced Materials and Hanjoo Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjoo Light Metal 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 Hanjoo Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanjoo Light Metal has no effect on the direction of INNOX Advanced i.e., INNOX Advanced and Hanjoo Light go up and down completely randomly.
Pair Corralation between INNOX Advanced and Hanjoo Light
Assuming the 90 days trading horizon INNOX Advanced Materials is expected to generate 0.71 times more return on investment than Hanjoo Light. However, INNOX Advanced Materials is 1.42 times less risky than Hanjoo Light. It trades about -0.02 of its potential returns per unit of risk. Hanjoo Light Metal is currently generating about -0.11 per unit of risk. If you would invest 2,753,184 in INNOX Advanced Materials on August 25, 2024 and sell it today you would lose (498,184) from holding INNOX Advanced Materials or give up 18.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INNOX Advanced Materials vs. Hanjoo Light Metal
Performance |
| Timeline |
| INNOX Advanced Materials |
| Hanjoo Light Metal |
INNOX Advanced and Hanjoo Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INNOX Advanced and Hanjoo Light
The main advantage of trading using opposite INNOX Advanced and Hanjoo Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INNOX Advanced position performs unexpectedly, Hanjoo Light 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 Hanjoo Light will offset losses from the drop in Hanjoo Light's long position.| INNOX Advanced vs. SK Hynix | INNOX Advanced vs. People Technology | INNOX Advanced vs. SIMMTECH Co | INNOX Advanced vs. Haesung DS Co |
| Hanjoo Light vs. Jeju Air Co | Hanjoo Light vs. Bohae Brewery | Hanjoo Light vs. InfoBank | Hanjoo Light vs. Lotte Non Life Insurance |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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