Correlation Between Insung Information and Hanil Chemical
Can any of the company-specific risk be diversified away by investing in both Insung Information and Hanil Chemical 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 Insung Information and Hanil Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insung Information Co and Hanil Chemical Ind, you can compare the effects of market volatilities on Insung Information and Hanil Chemical 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 Insung Information with a short position of Hanil Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insung Information and Hanil Chemical.
Diversification Opportunities for Insung Information and Hanil Chemical
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Insung and Hanil is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Insung Information Co and Hanil Chemical Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanil Chemical Ind and Insung Information 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 Insung Information Co are associated (or correlated) with Hanil Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanil Chemical Ind has no effect on the direction of Insung Information i.e., Insung Information and Hanil Chemical go up and down completely randomly.
Pair Corralation between Insung Information and Hanil Chemical
Assuming the 90 days trading horizon Insung Information Co is expected to under-perform the Hanil Chemical. In addition to that, Insung Information is 1.33 times more volatile than Hanil Chemical Ind. It trades about -0.12 of its total potential returns per unit of risk. Hanil Chemical Ind is currently generating about -0.06 per unit of volatility. If you would invest 1,248,000 in Hanil Chemical Ind on September 26, 2024 and sell it today you would lose (102,000) from holding Hanil Chemical Ind or give up 8.17% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Insung Information Co vs. Hanil Chemical Ind
Performance |
Timeline |
Insung Information |
Hanil Chemical Ind |
Insung Information and Hanil Chemical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Insung Information and Hanil Chemical
The main advantage of trading using opposite Insung Information and Hanil Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insung Information position performs unexpectedly, Hanil Chemical 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 Hanil Chemical will offset losses from the drop in Hanil Chemical's long position.Insung Information vs. Digital Power Communications | Insung Information vs. Kisan Telecom Co | Insung Information vs. Lotte Data Communication | Insung Information vs. Daejung Chemicals Metals |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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