Correlation Between Hankook Furniture and Access Bio

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

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

Diversification Opportunities for Hankook Furniture and Access Bio

-0.69

Correlation Coefficient

Hankook Furniture  Access Bio

Excellent diversification

The 3 months correlation between Hankook and Access is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Furniture Co and Access Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Access Bio and Hankook Furniture 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 Hankook Furniture Co are associated (or correlated) with Access Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Access Bio has no effect on the direction of Hankook Furniture i.e., Hankook Furniture and Access Bio go up and down completely randomly.

Pair Corralation between Hankook Furniture and Access Bio

Assuming the 90 days trading horizon Hankook Furniture Co is expected to generate 0.6 times more return on investment than Access Bio. However, Hankook Furniture Co is 1.67 times less risky than Access Bio. It trades about 0.1 of its potential returns per unit of risk. Access Bio is currently generating about -0.13 per unit of risk. If you would invest  371,500  in Hankook Furniture Co on September 27, 2024 and sell it today you would earn a total of  33,500  from holding Hankook Furniture Co or generate 9.02% return on investment over 90 days.

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

Hankook Furniture Co  vs.  Access Bio

Hankook Furniture

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hankook Furniture Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hankook Furniture may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Access Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Access Bio 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hankook Furniture and Access Bio

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

The idea behind Hankook Furniture Co and Access Bio 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.