Correlation Between Hurum and Okins Electronics
Can any of the company-specific risk be diversified away by investing in both Hurum and Okins Electronics 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 Okins Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hurum Co and Okins Electronics Co, you can compare the effects of market volatilities on Hurum and Okins Electronics 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 Okins Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hurum and Okins Electronics.
Diversification Opportunities for Hurum and Okins Electronics
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hurum and Okins is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hurum Co and Okins Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Okins Electronics 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 Okins Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Okins Electronics has no effect on the direction of Hurum i.e., Hurum and Okins Electronics go up and down completely randomly.
Pair Corralation between Hurum and Okins Electronics
Assuming the 90 days trading horizon Hurum Co is expected to generate 0.48 times more return on investment than Okins Electronics. However, Hurum Co is 2.08 times less risky than Okins Electronics. It trades about -0.03 of its potential returns per unit of risk. Okins Electronics Co is currently generating about -0.03 per unit of risk. If you would invest 118,000 in Hurum Co on September 3, 2024 and sell it today you would lose (47,500) from holding Hurum Co or give up 40.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hurum Co vs. Okins Electronics Co
Performance |
| Timeline |
| Hurum |
| Okins Electronics |
Hurum and Okins Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hurum and Okins Electronics
The main advantage of trading using opposite Hurum and Okins Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hurum position performs unexpectedly, Okins Electronics 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 Okins Electronics will offset losses from the drop in Okins Electronics' long position.| Hurum vs. Samhwa Paint Industrial | Hurum vs. EV Advanced Material | Hurum vs. Haesung Industrial Co | Hurum vs. Hyundai Industrial Co |
| Okins Electronics vs. DB Financial Investment | Okins Electronics vs. Polaris Office Corp | Okins Electronics vs. Innowireless Co | Okins Electronics vs. NICE Information Service |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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