Correlation Between Miwon Chemical and Home Center
Can any of the company-specific risk be diversified away by investing in both Miwon Chemical and Home Center 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 Miwon Chemical and Home Center into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miwon Chemical and Home Center Holdings, you can compare the effects of market volatilities on Miwon Chemical and Home Center 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 Miwon Chemical with a short position of Home Center. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miwon Chemical and Home Center.
Diversification Opportunities for Miwon Chemical and Home Center
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Miwon and Home is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Miwon Chemical and Home Center Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Center Holdings and Miwon Chemical 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 Miwon Chemical are associated (or correlated) with Home Center. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Center Holdings has no effect on the direction of Miwon Chemical i.e., Miwon Chemical and Home Center go up and down completely randomly.
Pair Corralation between Miwon Chemical and Home Center
Assuming the 90 days trading horizon Miwon Chemical is expected to generate 2.77 times less return on investment than Home Center. But when comparing it to its historical volatility, Miwon Chemical is 2.96 times less risky than Home Center. It trades about 0.14 of its potential returns per unit of risk. Home Center Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 78,500 in Home Center Holdings on September 26, 2024 and sell it today you would earn a total of 7,000 from holding Home Center Holdings or generate 8.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Miwon Chemical vs. Home Center Holdings
Performance |
Timeline |
Miwon Chemical |
Home Center Holdings |
Miwon Chemical and Home Center Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Miwon Chemical and Home Center
The main advantage of trading using opposite Miwon Chemical and Home Center positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miwon Chemical position performs unexpectedly, Home Center 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 Home Center will offset losses from the drop in Home Center's long position.Miwon Chemical vs. Inzi Display CoLtd | Miwon Chemical vs. Woori Technology Investment | Miwon Chemical vs. Coloray International Investment | Miwon Chemical vs. Nable Communications |
Home Center vs. LG Chemicals | Home Center vs. POSCO Holdings | Home Center vs. Hanwha Solutions | Home Center vs. Lotte Chemical Corp |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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