Correlation Between Solution Advanced and Han Kook

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Can any of the company-specific risk be diversified away by investing in both Solution Advanced and Han Kook 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 Solution Advanced and Han Kook into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and Han Kook Capital, you can compare the effects of market volatilities on Solution Advanced and Han Kook 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 Solution Advanced with a short position of Han Kook. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Han Kook.

Diversification Opportunities for Solution Advanced and Han Kook

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Solution and Han is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Han Kook Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Han Kook Capital and Solution Advanced 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 Solution Advanced Technology are associated (or correlated) with Han Kook. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Han Kook Capital has no effect on the direction of Solution Advanced i.e., Solution Advanced and Han Kook go up and down completely randomly.

Pair Corralation between Solution Advanced and Han Kook

Assuming the 90 days trading horizon Solution Advanced Technology is expected to under-perform the Han Kook. In addition to that, Solution Advanced is 2.47 times more volatile than Han Kook Capital. It trades about -0.1 of its total potential returns per unit of risk. Han Kook Capital is currently generating about 0.2 per unit of volatility. If you would invest  51,865  in Han Kook Capital on October 6, 2024 and sell it today you would earn a total of  3,035  from holding Han Kook Capital or generate 5.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Solution Advanced Technology  vs.  Han Kook Capital

 Performance 
       Timeline  
Solution Advanced 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Solution Advanced Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Han Kook Capital 

Risk-Adjusted Performance

0 of 100

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

Solution Advanced and Han Kook Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Solution Advanced and Han Kook

The main advantage of trading using opposite Solution Advanced and Han Kook positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced position performs unexpectedly, Han Kook 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 Han Kook will offset losses from the drop in Han Kook's long position.
The idea behind Solution Advanced Technology and Han Kook Capital 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.
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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