Correlation Between Carriesoft and Hwaseung Industries
Can any of the company-specific risk be diversified away by investing in both Carriesoft and Hwaseung Industries 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 Carriesoft and Hwaseung Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carriesoft Co and Hwaseung Industries Co, you can compare the effects of market volatilities on Carriesoft and Hwaseung Industries 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 Carriesoft with a short position of Hwaseung Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carriesoft and Hwaseung Industries.
Diversification Opportunities for Carriesoft and Hwaseung Industries
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carriesoft and Hwaseung is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Carriesoft Co and Hwaseung Industries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwaseung Industries and Carriesoft 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 Carriesoft Co are associated (or correlated) with Hwaseung Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwaseung Industries has no effect on the direction of Carriesoft i.e., Carriesoft and Hwaseung Industries go up and down completely randomly.
Pair Corralation between Carriesoft and Hwaseung Industries
Assuming the 90 days trading horizon Carriesoft Co is expected to under-perform the Hwaseung Industries. In addition to that, Carriesoft is 2.29 times more volatile than Hwaseung Industries Co. It trades about -0.09 of its total potential returns per unit of risk. Hwaseung Industries Co is currently generating about 0.05 per unit of volatility. If you would invest 411,500 in Hwaseung Industries Co on August 30, 2024 and sell it today you would earn a total of 7,000 from holding Hwaseung Industries Co or generate 1.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carriesoft Co vs. Hwaseung Industries Co
Performance |
| Timeline |
| Carriesoft |
| Hwaseung Industries |
Carriesoft and Hwaseung Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carriesoft and Hwaseung Industries
The main advantage of trading using opposite Carriesoft and Hwaseung Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carriesoft position performs unexpectedly, Hwaseung Industries 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 Hwaseung Industries will offset losses from the drop in Hwaseung Industries' long position.| Carriesoft vs. Seohee Construction Co | Carriesoft vs. Han Kook Steel | Carriesoft vs. HJ ShipBuilding Construction | Carriesoft vs. Daekyung Machinery Engineering |
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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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