Correlation Between Hurum and LEENO Industrial
Can any of the company-specific risk be diversified away by investing in both Hurum and LEENO 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 Hurum and LEENO Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hurum Co and LEENO Industrial, you can compare the effects of market volatilities on Hurum and LEENO 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 Hurum with a short position of LEENO Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hurum and LEENO Industrial.
Diversification Opportunities for Hurum and LEENO Industrial
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hurum and LEENO is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hurum Co and LEENO Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEENO Industrial and Hurum 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 Hurum Co are associated (or correlated) with LEENO Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEENO Industrial has no effect on the direction of Hurum i.e., Hurum and LEENO Industrial go up and down completely randomly.
Pair Corralation between Hurum and LEENO Industrial
Assuming the 90 days trading horizon Hurum Co is expected to under-perform the LEENO Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Hurum Co is 1.18 times less risky than LEENO Industrial. The stock trades about -0.03 of its potential returns per unit of risk. The LEENO Industrial is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 14,986,100 in LEENO Industrial on September 2, 2024 and sell it today you would earn a total of 443,900 from holding LEENO Industrial or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hurum Co vs. LEENO Industrial
Performance |
| Timeline |
| Hurum |
| LEENO Industrial |
Hurum and LEENO Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hurum and LEENO Industrial
The main advantage of trading using opposite Hurum and LEENO Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hurum position performs unexpectedly, LEENO 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 LEENO Industrial will offset losses from the drop in LEENO Industrial's long position.| Hurum vs. Samsung Electronics Co | Hurum vs. Samsung Electronics Co | Hurum vs. LG Energy Solution | Hurum vs. SK Hynix |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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