Correlation Between Hansol Homedeco and Daewon Media

Can any of the company-specific risk be diversified away by investing in both Hansol Homedeco and Daewon Media 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 Daewon Media 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 Daewon Media Co, you can compare the effects of market volatilities on Hansol Homedeco and Daewon Media 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 Daewon Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hansol Homedeco and Daewon Media.

Diversification Opportunities for Hansol Homedeco and Daewon Media

0.43

Correlation Coefficient

Hansol Homedeco  Daewon Media

Very weak diversification

The 3 months correlation between Hansol and Daewon is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hansol Homedeco Co and Daewon Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewon Media 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 Daewon Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewon Media has no effect on the direction of Hansol Homedeco i.e., Hansol Homedeco and Daewon Media go up and down completely randomly.

Pair Corralation between Hansol Homedeco and Daewon Media

Assuming the 90 days trading horizon Hansol Homedeco is expected to generate 1.13 times less return on investment than Daewon Media. In addition to that, Hansol Homedeco is 2.34 times more volatile than Daewon Media Co. It trades about 0.11 of its total potential returns per unit of risk. Daewon Media Co is currently generating about 0.28 per unit of volatility. If you would invest  759,000  in Daewon Media Co on December 25, 2024 and sell it today you would earn a total of  341,000  from holding Daewon Media Co or generate 44.93% return on investment over 90 days.

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

Hansol Homedeco Co  vs.  Daewon Media Co

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 8 (%) 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.

Daewon Media

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Daewon Media Co are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daewon Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hansol Homedeco and Daewon Media

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

The idea behind Hansol Homedeco Co and Daewon Media 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..