Correlation Between Tae Kyung and Hironic Co

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

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

Diversification Opportunities for Tae Kyung and Hironic Co

0.35

Correlation Coefficient

Tae Kyung  Hironic Co

Weak diversification

The 3 months correlation between Tae and Hironic is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Tae Kyung Chemical and Hironic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hironic Co and Tae Kyung 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 Tae Kyung Chemical are associated (or correlated) with Hironic Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hironic Co has no effect on the direction of Tae Kyung i.e., Tae Kyung and Hironic Co go up and down completely randomly.

Pair Corralation between Tae Kyung and Hironic Co

Assuming the 90 days trading horizon Tae Kyung is expected to generate 1.01 times less return on investment than Hironic Co. But when comparing it to its historical volatility, Tae Kyung Chemical is 2.38 times less risky than Hironic Co. It trades about 0.13 of its potential returns per unit of risk. Hironic Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  584,000  in Hironic Co on October 1, 2024 and sell it today you would earn a total of  19,000  from holding Hironic Co or generate 3.25% return on investment over 90 days.

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

Tae Kyung Chemical  vs.  Hironic Co

Tae Kyung Chemical

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tae Kyung Chemical are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tae Kyung may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hironic Co

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 Co is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tae Kyung and Hironic Co

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

The idea behind Tae Kyung Chemical and Hironic Co 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.