Correlation Between Hyosung Advanced and Microfriend
Can any of the company-specific risk be diversified away by investing in both Hyosung Advanced and Microfriend 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 Hyosung Advanced and Microfriend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyosung Advanced Materials and Microfriend, you can compare the effects of market volatilities on Hyosung Advanced and Microfriend 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 Hyosung Advanced with a short position of Microfriend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyosung Advanced and Microfriend.
Diversification Opportunities for Hyosung Advanced and Microfriend
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hyosung and Microfriend is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Hyosung Advanced Materials and Microfriend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microfriend and Hyosung 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 Hyosung Advanced Materials are associated (or correlated) with Microfriend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microfriend has no effect on the direction of Hyosung Advanced i.e., Hyosung Advanced and Microfriend go up and down completely randomly.
Pair Corralation between Hyosung Advanced and Microfriend
Assuming the 90 days trading horizon Hyosung Advanced Materials is expected to under-perform the Microfriend. But the stock apears to be less risky and, when comparing its historical volatility, Hyosung Advanced Materials is 1.49 times less risky than Microfriend. The stock trades about -0.04 of its potential returns per unit of risk. The Microfriend is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 505,000 in Microfriend on September 5, 2024 and sell it today you would lose (212,500) from holding Microfriend or give up 42.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyosung Advanced Materials vs. Microfriend
Performance |
| Timeline |
| Hyosung Advanced Mat |
| Microfriend |
Hyosung Advanced and Microfriend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyosung Advanced and Microfriend
The main advantage of trading using opposite Hyosung Advanced and Microfriend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyosung Advanced position performs unexpectedly, Microfriend 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 Microfriend will offset losses from the drop in Microfriend's long position.| Hyosung Advanced vs. Daol Investment Securities | Hyosung Advanced vs. TS Investment Corp | Hyosung Advanced vs. Seohee Construction Co | Hyosung Advanced vs. Nh Investment And |
| Microfriend vs. SK Hynix | Microfriend vs. LX Semicon Co | Microfriend vs. Tokai Carbon Korea | Microfriend vs. People Technology |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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