Correlation Between Iljin Display and Hugel

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

By analyzing existing cross correlation between Iljin Display and Hugel Inc, you can compare the effects of market volatilities on Iljin Display and Hugel 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 Iljin Display with a short position of Hugel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iljin Display and Hugel.

Diversification Opportunities for Iljin Display and Hugel

-0.48

Correlation Coefficient

Iljin Display  Hugel

Very good diversification

The 3 months correlation between Iljin and Hugel is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Iljin Display and Hugel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hugel Inc and Iljin Display 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 Iljin Display are associated (or correlated) with Hugel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hugel Inc has no effect on the direction of Iljin Display i.e., Iljin Display and Hugel go up and down completely randomly.

Pair Corralation between Iljin Display and Hugel

Assuming the 90 days trading horizon Iljin Display is expected to under-perform the Hugel. But the stock apears to be less risky and, when comparing its historical volatility, Iljin Display is 3.39 times less risky than Hugel. The stock trades about -0.28 of its potential returns per unit of risk. The Hugel Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  24,800,000  in Hugel Inc on September 12, 2024 and sell it today you would earn a total of  1,700,000  from holding Hugel Inc or generate 6.85% return on investment over 90 days.

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

Iljin Display  vs.  Hugel Inc

Iljin Display

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iljin Display 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.

Hugel Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hugel Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hugel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Iljin Display and Hugel

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

The idea behind Iljin Display and Hugel Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.