Correlation Between HMM and Bokwang Industry
Can any of the company-specific risk be diversified away by investing in both HMM and Bokwang Industry 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 HMM and Bokwang Industry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMM Co and Bokwang Industry Co, you can compare the effects of market volatilities on HMM and Bokwang Industry 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 HMM with a short position of Bokwang Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMM and Bokwang Industry.
Diversification Opportunities for HMM and Bokwang Industry
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HMM and Bokwang is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding HMM Co and Bokwang Industry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bokwang Industry and HMM 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 HMM Co are associated (or correlated) with Bokwang Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bokwang Industry has no effect on the direction of HMM i.e., HMM and Bokwang Industry go up and down completely randomly.
Pair Corralation between HMM and Bokwang Industry
Assuming the 90 days trading horizon HMM Co is expected to generate 4.16 times more return on investment than Bokwang Industry. However, HMM is 4.16 times more volatile than Bokwang Industry Co. It trades about 0.01 of its potential returns per unit of risk. Bokwang Industry Co is currently generating about 0.02 per unit of risk. If you would invest 1,608,000 in HMM Co on February 3, 2024 and sell it today you would lose (48,000) from holding HMM Co or give up 2.99% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 99.01% |
Values | Daily Returns |
HMM Co vs. Bokwang Industry Co
Performance |
Timeline |
HMM Co |
Bokwang Industry |
HMM and Bokwang Industry Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HMM and Bokwang Industry
The main advantage of trading using opposite HMM and Bokwang Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMM position performs unexpectedly, Bokwang Industry 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 Bokwang Industry will offset losses from the drop in Bokwang Industry's long position.The idea behind HMM Co and Bokwang Industry 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.Bokwang Industry vs. Eugene | Bokwang Industry vs. Dongkuk Refractories Steel | Bokwang Industry vs. Busan Industrial Co |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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