Correlation Between HLB Pharmaceutical and Kolon Life

Can any of the company-specific risk be diversified away by investing in both HLB Pharmaceutical and Kolon Life 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 HLB Pharmaceutical and Kolon Life into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HLB Pharmaceutical Co and Kolon Life Science, you can compare the effects of market volatilities on HLB Pharmaceutical and Kolon Life 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 HLB Pharmaceutical with a short position of Kolon Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of HLB Pharmaceutical and Kolon Life.

Diversification Opportunities for HLB Pharmaceutical and Kolon Life

0.05

Correlation Coefficient

HLB Pharmaceutical  Kolon Life

Significant diversification

The 3 months correlation between HLB and Kolon is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding HLB Pharmaceutical Co and Kolon Life Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kolon Life Science and HLB Pharmaceutical 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 HLB Pharmaceutical Co are associated (or correlated) with Kolon Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kolon Life Science has no effect on the direction of HLB Pharmaceutical i.e., HLB Pharmaceutical and Kolon Life go up and down completely randomly.

Pair Corralation between HLB Pharmaceutical and Kolon Life

Assuming the 90 days trading horizon HLB Pharmaceutical is expected to generate 25.76 times less return on investment than Kolon Life. In addition to that, HLB Pharmaceutical is 1.53 times more volatile than Kolon Life Science. It trades about 0.0 of its total potential returns per unit of risk. Kolon Life Science is currently generating about 0.11 per unit of volatility. If you would invest  2,310,000  in Kolon Life Science on December 31, 2024 and sell it today you would earn a total of  600,000  from holding Kolon Life Science or generate 25.97% return on investment over 90 days.

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

HLB Pharmaceutical Co  vs.  Kolon Life Science

HLB Pharmaceutical

Risk-Adjusted Performance

Very Weak

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

Kolon Life Science

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kolon Life Science are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kolon Life sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HLB Pharmaceutical and Kolon Life

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

The idea behind HLB Pharmaceutical Co and Kolon Life Science 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.