Correlation Between SBI Investment and Hankukpackage

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

By analyzing existing cross correlation between SBI Investment KOREA and Hankukpackage Co, you can compare the effects of market volatilities on SBI Investment and Hankukpackage 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 SBI Investment with a short position of Hankukpackage. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Investment and Hankukpackage.

Diversification Opportunities for SBI Investment and Hankukpackage

0.79

Correlation Coefficient

SBI Investment  Hankukpackage

Poor diversification

The 3 months correlation between SBI and Hankukpackage is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding SBI Investment KOREA and Hankukpackage Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankukpackage and SBI Investment 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 SBI Investment KOREA are associated (or correlated) with Hankukpackage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankukpackage has no effect on the direction of SBI Investment i.e., SBI Investment and Hankukpackage go up and down completely randomly.

Pair Corralation between SBI Investment and Hankukpackage

Assuming the 90 days trading horizon SBI Investment KOREA is expected to under-perform the Hankukpackage. In addition to that, SBI Investment is 1.89 times more volatile than Hankukpackage Co. It trades about -0.11 of its total potential returns per unit of risk. Hankukpackage Co is currently generating about -0.02 per unit of volatility. If you would invest  166,500  in Hankukpackage Co on December 26, 2024 and sell it today you would lose (2,500) from holding Hankukpackage Co or give up 1.5% of portfolio value over 90 days.

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

SBI Investment KOREA  vs.  Hankukpackage Co

SBI Investment KOREA

Risk-Adjusted Performance

Very Weak

Over the last 90 days SBI Investment KOREA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hankukpackage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hankukpackage Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hankukpackage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SBI Investment and Hankukpackage

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

The idea behind SBI Investment KOREA and Hankukpackage 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.