Correlation Between Insun Environment and Heungkuk Metaltech

Can any of the company-specific risk be diversified away by investing in both Insun Environment and Heungkuk Metaltech 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 Insun Environment and Heungkuk Metaltech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Insun Environment New and Heungkuk Metaltech CoLtd, you can compare the effects of market volatilities on Insun Environment and Heungkuk Metaltech 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 Insun Environment with a short position of Heungkuk Metaltech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insun Environment and Heungkuk Metaltech.

Diversification Opportunities for Insun Environment and Heungkuk Metaltech

-0.49

Correlation Coefficient

Insun Environment  Heungkuk Metaltech

Very good diversification

The 3 months correlation between Insun and Heungkuk is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Insun Environment New and Heungkuk Metaltech CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heungkuk Metaltech CoLtd and Insun Environment 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 Insun Environment New are associated (or correlated) with Heungkuk Metaltech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heungkuk Metaltech CoLtd has no effect on the direction of Insun Environment i.e., Insun Environment and Heungkuk Metaltech go up and down completely randomly.

Pair Corralation between Insun Environment and Heungkuk Metaltech

Assuming the 90 days trading horizon Insun Environment New is expected to under-perform the Heungkuk Metaltech. But the stock apears to be less risky and, when comparing its historical volatility, Insun Environment New is 1.08 times less risky than Heungkuk Metaltech. The stock trades about -0.11 of its potential returns per unit of risk. The Heungkuk Metaltech CoLtd is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  525,044  in Heungkuk Metaltech CoLtd on December 24, 2024 and sell it today you would lose (12,044) from holding Heungkuk Metaltech CoLtd or give up 2.29% of portfolio value over 90 days.

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

Insun Environment New  vs.  Heungkuk Metaltech CoLtd

Insun Environment New

Risk-Adjusted Performance

Very Weak

Over the last 90 days Insun Environment New has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Heungkuk Metaltech CoLtd

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Insun Environment and Heungkuk Metaltech

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

The idea behind Insun Environment New and Heungkuk Metaltech 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.