Correlation Between Hansol Homedeco and Sungwoo Techron

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

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

Diversification Opportunities for Hansol Homedeco and Sungwoo Techron

0.77

Correlation Coefficient

Hansol Homedeco  Sungwoo Techron

Poor diversification

The 3 months correlation between Hansol and Sungwoo is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hansol Homedeco Co and Sungwoo Techron CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungwoo Techron CoLtd and Hansol Homedeco 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 Hansol Homedeco Co are associated (or correlated) with Sungwoo Techron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungwoo Techron CoLtd has no effect on the direction of Hansol Homedeco i.e., Hansol Homedeco and Sungwoo Techron go up and down completely randomly.

Pair Corralation between Hansol Homedeco and Sungwoo Techron

Assuming the 90 days trading horizon Hansol Homedeco Co is expected to generate 1.52 times more return on investment than Sungwoo Techron. However, Hansol Homedeco is 1.52 times more volatile than Sungwoo Techron CoLtd. It trades about 0.1 of its potential returns per unit of risk. Sungwoo Techron CoLtd is currently generating about 0.07 per unit of risk. If you would invest  72,800  in Hansol Homedeco Co on October 13, 2024 and sell it today you would earn a total of  13,200  from holding Hansol Homedeco Co or generate 18.13% return on investment over 90 days.

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

Hansol Homedeco Co  vs.  Sungwoo Techron CoLtd

Hansol Homedeco

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hansol Homedeco Co are ranked lower than 7 (%) 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.

Sungwoo Techron CoLtd

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sungwoo Techron CoLtd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sungwoo Techron may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hansol Homedeco and Sungwoo Techron

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

The idea behind Hansol Homedeco Co and Sungwoo Techron CoLtd 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.