Correlation Between KakaoBank Corp and Hwasung Industrial
Can any of the company-specific risk be diversified away by investing in both KakaoBank Corp and Hwasung Industrial 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 KakaoBank Corp and Hwasung Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KakaoBank Corp and Hwasung Industrial Co, you can compare the effects of market volatilities on KakaoBank Corp and Hwasung Industrial 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 KakaoBank Corp with a short position of Hwasung Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of KakaoBank Corp and Hwasung Industrial.
Diversification Opportunities for KakaoBank Corp and Hwasung Industrial
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KakaoBank and Hwasung is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding KakaoBank Corp and Hwasung Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwasung Industrial and KakaoBank Corp 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 KakaoBank Corp are associated (or correlated) with Hwasung Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwasung Industrial has no effect on the direction of KakaoBank Corp i.e., KakaoBank Corp and Hwasung Industrial go up and down completely randomly.
Pair Corralation between KakaoBank Corp and Hwasung Industrial
Assuming the 90 days trading horizon KakaoBank Corp is expected to under-perform the Hwasung Industrial. In addition to that, KakaoBank Corp is 1.1 times more volatile than Hwasung Industrial Co. It trades about -0.17 of its total potential returns per unit of risk. Hwasung Industrial Co is currently generating about -0.04 per unit of volatility. If you would invest 971,000 in Hwasung Industrial Co on October 28, 2024 and sell it today you would lose (10,000) from holding Hwasung Industrial Co or give up 1.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KakaoBank Corp vs. Hwasung Industrial Co
Performance |
| Timeline |
| KakaoBank Corp |
| Hwasung Industrial |
KakaoBank Corp and Hwasung Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KakaoBank Corp and Hwasung Industrial
The main advantage of trading using opposite KakaoBank Corp and Hwasung Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KakaoBank Corp position performs unexpectedly, Hwasung Industrial 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 Hwasung Industrial will offset losses from the drop in Hwasung Industrial's long position.| KakaoBank Corp vs. Shinhan Financial Group | KakaoBank Corp vs. Hana Financial | KakaoBank Corp vs. Woori Financial Group | KakaoBank Corp vs. Industrial Bank |
| Hwasung Industrial vs. KB Financial Group | Hwasung Industrial vs. Shinhan Financial Group | Hwasung Industrial vs. Hana Financial | Hwasung Industrial vs. Woori Financial Group |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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