Correlation Between HS Valve and Raontech
Can any of the company-specific risk be diversified away by investing in both HS Valve and Raontech 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 HS Valve and Raontech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HS Valve Co and Raontech, you can compare the effects of market volatilities on HS Valve and Raontech 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 HS Valve with a short position of Raontech. Check out your portfolio center. Please also check ongoing floating volatility patterns of HS Valve and Raontech.
Diversification Opportunities for HS Valve and Raontech
Very good diversification
The 3 months correlation between 039610 and Raontech is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding HS Valve Co and Raontech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raontech and HS Valve 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 HS Valve Co are associated (or correlated) with Raontech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raontech has no effect on the direction of HS Valve i.e., HS Valve and Raontech go up and down completely randomly.
Pair Corralation between HS Valve and Raontech
Assuming the 90 days trading horizon HS Valve Co is expected to generate 0.97 times more return on investment than Raontech. However, HS Valve Co is 1.03 times less risky than Raontech. It trades about 0.06 of its potential returns per unit of risk. Raontech is currently generating about 0.02 per unit of risk. If you would invest 750,000 in HS Valve Co on December 4, 2024 and sell it today you would earn a total of 80,000 from holding HS Valve Co or generate 10.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
HS Valve Co vs. Raontech
Performance |
Timeline |
HS Valve |
Raontech |
HS Valve and Raontech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HS Valve and Raontech
The main advantage of trading using opposite HS Valve and Raontech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HS Valve position performs unexpectedly, Raontech 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 Raontech will offset losses from the drop in Raontech's long position.HS Valve vs. Korea Alcohol Industrial | ||
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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