Correlation Between Taeyang Metal and Hansol Homedeco

Can any of the company-specific risk be diversified away by investing in both Taeyang Metal and Hansol Homedeco 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 Taeyang Metal and Hansol Homedeco into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Taeyang Metal Industrial and Hansol Homedeco Co, you can compare the effects of market volatilities on Taeyang Metal and Hansol Homedeco 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 Taeyang Metal with a short position of Hansol Homedeco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taeyang Metal and Hansol Homedeco.

Diversification Opportunities for Taeyang Metal and Hansol Homedeco

0.25

Correlation Coefficient

Taeyang Metal  Hansol Homedeco

Modest diversification

The 3 months correlation between Taeyang and Hansol is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Taeyang Metal Industrial and Hansol Homedeco Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansol Homedeco and Taeyang Metal 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 Taeyang Metal Industrial are associated (or correlated) with Hansol Homedeco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansol Homedeco has no effect on the direction of Taeyang Metal i.e., Taeyang Metal and Hansol Homedeco go up and down completely randomly.

Pair Corralation between Taeyang Metal and Hansol Homedeco

Assuming the 90 days trading horizon Taeyang Metal is expected to generate 1.27 times less return on investment than Hansol Homedeco. In addition to that, Taeyang Metal is 1.18 times more volatile than Hansol Homedeco Co. It trades about 0.09 of its total potential returns per unit of risk. Hansol Homedeco Co is currently generating about 0.13 per unit of volatility. If you would invest  66,000  in Hansol Homedeco Co on November 29, 2024 and sell it today you would earn a total of  27,000  from holding Hansol Homedeco Co or generate 40.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Taeyang Metal Industrial  vs.  Hansol Homedeco Co

Taeyang Metal Industrial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Taeyang Metal Industrial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Taeyang Metal sustained solid returns over the last few months and may actually be approaching a breakup point.

Hansol Homedeco

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hansol Homedeco Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hansol Homedeco sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Taeyang Metal and Hansol Homedeco

The main advantage of trading using opposite Taeyang Metal and Hansol Homedeco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taeyang Metal position performs unexpectedly, Hansol Homedeco 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 Hansol Homedeco will offset losses from the drop in Hansol Homedeco's long position.

The idea behind Taeyang Metal Industrial and Hansol Homedeco Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.