Correlation Between Hironic and ENERGYMACHINERY KOREA

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

By analyzing existing cross correlation between Hironic Co and ENERGYMACHINERY KOREA CoLtd, you can compare the effects of market volatilities on Hironic and ENERGYMACHINERY KOREA 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 Hironic with a short position of ENERGYMACHINERY KOREA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hironic and ENERGYMACHINERY KOREA.

Diversification Opportunities for Hironic and ENERGYMACHINERY KOREA

0.45

Correlation Coefficient

Hironic  ENERGYMACHINERY KOREA

Very weak diversification

The 3 months correlation between Hironic and ENERGYMACHINERY is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hironic Co and ENERGYMACHINERY KOREA CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENERGYMACHINERY KOREA and Hironic 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 Hironic Co are associated (or correlated) with ENERGYMACHINERY KOREA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENERGYMACHINERY KOREA has no effect on the direction of Hironic i.e., Hironic and ENERGYMACHINERY KOREA go up and down completely randomly.

Pair Corralation between Hironic and ENERGYMACHINERY KOREA

Assuming the 90 days trading horizon Hironic Co is expected to under-perform the ENERGYMACHINERY KOREA. In addition to that, Hironic is 1.16 times more volatile than ENERGYMACHINERY KOREA CoLtd. It trades about -0.01 of its total potential returns per unit of risk. ENERGYMACHINERY KOREA CoLtd is currently generating about 0.05 per unit of volatility. If you would invest  221,000  in ENERGYMACHINERY KOREA CoLtd on October 25, 2024 and sell it today you would earn a total of  15,000  from holding ENERGYMACHINERY KOREA CoLtd or generate 6.79% return on investment over 90 days.

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

Hironic Co  vs.  ENERGYMACHINERY KOREA CoLtd

Hironic

Risk-Adjusted Performance

0 of 100

Very Weak

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

ENERGYMACHINERY KOREA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ENERGYMACHINERY KOREA CoLtd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ENERGYMACHINERY KOREA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hironic and ENERGYMACHINERY KOREA

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

The idea behind Hironic Co and ENERGYMACHINERY KOREA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.