Correlation Between Han Kook and RPBio
Can any of the company-specific risk be diversified away by investing in both Han Kook and RPBio 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 Han Kook and RPBio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Han Kook Steel and RPBio Inc, you can compare the effects of market volatilities on Han Kook and RPBio 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 Han Kook with a short position of RPBio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Han Kook and RPBio.
Diversification Opportunities for Han Kook and RPBio
Average diversification
The 3 months correlation between Han and RPBio is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Han Kook Steel and RPBio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RPBio Inc and Han Kook 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 Han Kook Steel are associated (or correlated) with RPBio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RPBio Inc has no effect on the direction of Han Kook i.e., Han Kook and RPBio go up and down completely randomly.
Pair Corralation between Han Kook and RPBio
Assuming the 90 days trading horizon Han Kook Steel is expected to generate 1.72 times more return on investment than RPBio. However, Han Kook is 1.72 times more volatile than RPBio Inc. It trades about 0.01 of its potential returns per unit of risk. RPBio Inc is currently generating about -0.11 per unit of risk. If you would invest 196,100 in Han Kook Steel on September 7, 2024 and sell it today you would lose (3,800) from holding Han Kook Steel or give up 1.94% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Han Kook Steel vs. RPBio Inc
Performance |
Timeline |
Han Kook Steel |
RPBio Inc |
Han Kook and RPBio Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Han Kook and RPBio
The main advantage of trading using opposite Han Kook and RPBio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Han Kook position performs unexpectedly, RPBio 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 RPBio will offset losses from the drop in RPBio's long position.Han Kook vs. CKH Food Health | Han Kook vs. Shin Steel Co | Han Kook vs. Jeil Steel Mfg | Han Kook vs. INFINITT Healthcare Co |
RPBio vs. Jeong Moon Information | RPBio vs. Top Material Co | RPBio vs. Moadata Co | RPBio vs. WONIK Materials CoLtd |
Check out your portfolio center.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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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