Correlation Between Korean Reinsurance and Hanshin Construction
Can any of the company-specific risk be diversified away by investing in both Korean Reinsurance and Hanshin Construction 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 Korean Reinsurance and Hanshin Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korean Reinsurance Co and Hanshin Construction Co, you can compare the effects of market volatilities on Korean Reinsurance and Hanshin Construction 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 Korean Reinsurance with a short position of Hanshin Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Reinsurance and Hanshin Construction.
Diversification Opportunities for Korean Reinsurance and Hanshin Construction
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korean and Hanshin is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Korean Reinsurance Co and Hanshin Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanshin Construction and Korean Reinsurance 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 Korean Reinsurance Co are associated (or correlated) with Hanshin Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanshin Construction has no effect on the direction of Korean Reinsurance i.e., Korean Reinsurance and Hanshin Construction go up and down completely randomly.
Pair Corralation between Korean Reinsurance and Hanshin Construction
Assuming the 90 days trading horizon Korean Reinsurance Co is expected to generate 0.6 times more return on investment than Hanshin Construction. However, Korean Reinsurance Co is 1.67 times less risky than Hanshin Construction. It trades about 0.17 of its potential returns per unit of risk. Hanshin Construction Co is currently generating about -0.01 per unit of risk. If you would invest 688,333 in Korean Reinsurance Co on September 25, 2024 and sell it today you would earn a total of 117,667 from holding Korean Reinsurance Co or generate 17.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Korean Reinsurance Co vs. Hanshin Construction Co
Performance |
Timeline |
Korean Reinsurance |
Hanshin Construction |
Korean Reinsurance and Hanshin Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Korean Reinsurance and Hanshin Construction
The main advantage of trading using opposite Korean Reinsurance and Hanshin Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Reinsurance position performs unexpectedly, Hanshin Construction 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 Hanshin Construction will offset losses from the drop in Hanshin Construction's long position.Korean Reinsurance vs. AptaBio Therapeutics | Korean Reinsurance vs. Wonbang Tech Co | Korean Reinsurance vs. Busan Industrial Co | Korean Reinsurance vs. Busan Ind |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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