Correlation Between KakaoBank Corp and Hankook Furniture
Can any of the company-specific risk be diversified away by investing in both KakaoBank Corp 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 KakaoBank Corp and Hankook Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KakaoBank Corp and Hankook Furniture Co, you can compare the effects of market volatilities on KakaoBank Corp 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 KakaoBank Corp with a short position of Hankook Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of KakaoBank Corp and Hankook Furniture.
Diversification Opportunities for KakaoBank Corp and Hankook Furniture
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between KakaoBank and Hankook is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding KakaoBank Corp and Hankook Furniture Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankook Furniture 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 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 KakaoBank Corp i.e., KakaoBank Corp and Hankook Furniture go up and down completely randomly.
Pair Corralation between KakaoBank Corp and Hankook Furniture
Assuming the 90 days trading horizon KakaoBank Corp is expected to generate 6.42 times less return on investment than Hankook Furniture. But when comparing it to its historical volatility, KakaoBank Corp is 1.02 times less risky than Hankook Furniture. It trades about 0.04 of its potential returns per unit of risk. Hankook Furniture Co is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 369,500 in Hankook Furniture Co on August 29, 2024 and sell it today you would earn a total of 42,000 from holding Hankook Furniture Co or generate 11.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KakaoBank Corp vs. Hankook Furniture Co
Performance |
| Timeline |
| KakaoBank Corp |
| Hankook Furniture |
KakaoBank Corp and Hankook Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KakaoBank Corp and Hankook Furniture
The main advantage of trading using opposite KakaoBank Corp and Hankook Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KakaoBank Corp 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.| KakaoBank Corp vs. Shinhan Financial Group | KakaoBank Corp vs. Hana Financial | KakaoBank Corp vs. Woori Financial Group | KakaoBank Corp vs. Industrial Bank |
| Hankook Furniture vs. KMH Hitech Co | Hankook Furniture vs. GemVaxKAEL CoLtd | Hankook Furniture vs. Busan Industrial Co | Hankook Furniture vs. Busan Ind |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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