Correlation Between Hansol Homedeco and Daebo Magnetic

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

Diversification Opportunities for Hansol Homedeco and Daebo Magnetic

0.93

Correlation Coefficient

Hansol Homedeco  Daebo Magnetic

Almost no diversification

The 3 months correlation between Hansol and Daebo is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Hansol Homedeco Co and Daebo Magnetic CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daebo Magnetic 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 Daebo Magnetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daebo Magnetic CoLtd has no effect on the direction of Hansol Homedeco i.e., Hansol Homedeco and Daebo Magnetic go up and down completely randomly.

Pair Corralation between Hansol Homedeco and Daebo Magnetic

Assuming the 90 days trading horizon Hansol Homedeco Co is expected to generate 0.52 times more return on investment than Daebo Magnetic. However, Hansol Homedeco Co is 1.92 times less risky than Daebo Magnetic. It trades about -0.04 of its potential returns per unit of risk. Daebo Magnetic CoLtd is currently generating about -0.13 per unit of risk. If you would invest  68,400  in Hansol Homedeco Co on September 15, 2024 and sell it today you would lose (3,700) from holding Hansol Homedeco Co or give up 5.41% of portfolio value over 90 days.

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

Hansol Homedeco Co  vs.  Daebo Magnetic CoLtd

Hansol Homedeco

Risk-Adjusted Performance

0 of 100

Very Weak

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

Daebo Magnetic CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daebo Magnetic CoLtd 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hansol Homedeco and Daebo Magnetic

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

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