Correlation Between Hanjoo Light and Tae Kyung
Can any of the company-specific risk be diversified away by investing in both Hanjoo Light and Tae Kyung 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 Hanjoo Light and Tae Kyung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanjoo Light Metal and Tae Kyung Chemical, you can compare the effects of market volatilities on Hanjoo Light and Tae Kyung 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 Hanjoo Light with a short position of Tae Kyung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjoo Light and Tae Kyung.
Diversification Opportunities for Hanjoo Light and Tae Kyung
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hanjoo and Tae is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hanjoo Light Metal and Tae Kyung Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tae Kyung Chemical and Hanjoo Light 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 Hanjoo Light Metal are associated (or correlated) with Tae Kyung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tae Kyung Chemical has no effect on the direction of Hanjoo Light i.e., Hanjoo Light and Tae Kyung go up and down completely randomly.
Pair Corralation between Hanjoo Light and Tae Kyung
Assuming the 90 days trading horizon Hanjoo Light Metal is expected to under-perform the Tae Kyung. In addition to that, Hanjoo Light is 1.29 times more volatile than Tae Kyung Chemical. It trades about -0.13 of its total potential returns per unit of risk. Tae Kyung Chemical is currently generating about 0.06 per unit of volatility. If you would invest 1,065,847 in Tae Kyung Chemical on October 31, 2024 and sell it today you would earn a total of 59,153 from holding Tae Kyung Chemical or generate 5.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Hanjoo Light Metal vs. Tae Kyung Chemical
Performance |
Timeline |
Hanjoo Light Metal |
Tae Kyung Chemical |
Hanjoo Light and Tae Kyung Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hanjoo Light and Tae Kyung
The main advantage of trading using opposite Hanjoo Light and Tae Kyung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjoo Light position performs unexpectedly, Tae Kyung 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 Tae Kyung will offset losses from the drop in Tae Kyung's long position.Hanjoo Light vs. Nh Investment And | ||
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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