Correlation Between SK Chemicals and Hankook Furniture
Can any of the company-specific risk be diversified away by investing in both SK Chemicals 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 SK Chemicals and Hankook Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Chemicals Co and Hankook Furniture Co, you can compare the effects of market volatilities on SK Chemicals 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 SK Chemicals with a short position of Hankook Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Chemicals and Hankook Furniture.
Diversification Opportunities for SK Chemicals and Hankook Furniture
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 28513K and Hankook is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding SK Chemicals Co and Hankook Furniture Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankook Furniture and SK Chemicals 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 SK Chemicals Co 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 SK Chemicals i.e., SK Chemicals and Hankook Furniture go up and down completely randomly.
Pair Corralation between SK Chemicals and Hankook Furniture
Assuming the 90 days trading horizon SK Chemicals is expected to generate 1.2 times less return on investment than Hankook Furniture. In addition to that, SK Chemicals is 1.31 times more volatile than Hankook Furniture Co. It trades about 0.08 of its total potential returns per unit of risk. Hankook Furniture Co is currently generating about 0.13 per unit of volatility. If you would invest 406,500 in Hankook Furniture Co on September 18, 2024 and sell it today you would earn a total of 17,500 from holding Hankook Furniture Co or generate 4.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Chemicals Co vs. Hankook Furniture Co
Performance |
| Timeline |
| SK Chemicals |
| Hankook Furniture |
SK Chemicals and Hankook Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Chemicals and Hankook Furniture
The main advantage of trading using opposite SK Chemicals and Hankook Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Chemicals 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.| SK Chemicals vs. Aprogen Healthcare Games | SK Chemicals vs. People Technology | SK Chemicals vs. Netmarble Games Corp | SK Chemicals vs. Korea Shipbuilding Offshore |
| Hankook Furniture vs. Samyang Foods Co | Hankook Furniture vs. Sungmoon Electronics Co | Hankook Furniture vs. Samsung Electronics Co | Hankook Furniture vs. Cuckoo 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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