Correlation Between Hurum and LF
Can any of the company-specific risk be diversified away by investing in both Hurum and LF 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 LF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hurum Co and LF Co, you can compare the effects of market volatilities on Hurum and LF 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 LF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hurum and LF.
Diversification Opportunities for Hurum and LF
Very good diversification
The 3 months correlation between Hurum and LF is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hurum Co and LF Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LF Co 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 LF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LF Co has no effect on the direction of Hurum i.e., Hurum and LF go up and down completely randomly.
Pair Corralation between Hurum and LF
Assuming the 90 days trading horizon Hurum Co is expected to generate 0.56 times more return on investment than LF. However, Hurum Co is 1.8 times less risky than LF. It trades about -0.05 of its potential returns per unit of risk. LF Co is currently generating about -0.04 per unit of risk. If you would invest 127,900 in Hurum Co on August 31, 2024 and sell it today you would lose (55,200) from holding Hurum Co or give up 43.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Hurum Co vs. LF Co
Performance |
| Timeline |
| Hurum |
| LF Co |
Hurum and LF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hurum and LF
The main advantage of trading using opposite Hurum and LF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hurum position performs unexpectedly, LF 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 LF will offset losses from the drop in LF's long position.| Hurum vs. Shinsegae Information Communication | Hurum vs. Korea Computer | Hurum vs. LG Display Co | Hurum vs. Sangsangin Investment Securities |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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