Correlation Between Tongyang and Hankuk Steel
Can any of the company-specific risk be diversified away by investing in both Tongyang and Hankuk Steel 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 Tongyang and Hankuk Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tongyang and Hankuk Steel Wire, you can compare the effects of market volatilities on Tongyang and Hankuk Steel 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 Tongyang with a short position of Hankuk Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tongyang and Hankuk Steel.
Diversification Opportunities for Tongyang and Hankuk Steel
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tongyang and Hankuk is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Tongyang and Hankuk Steel Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankuk Steel Wire and Tongyang 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 Tongyang are associated (or correlated) with Hankuk Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankuk Steel Wire has no effect on the direction of Tongyang i.e., Tongyang and Hankuk Steel go up and down completely randomly.
Pair Corralation between Tongyang and Hankuk Steel
Assuming the 90 days trading horizon Tongyang is expected to under-perform the Hankuk Steel. In addition to that, Tongyang is 3.4 times more volatile than Hankuk Steel Wire. It trades about -0.01 of its total potential returns per unit of risk. Hankuk Steel Wire is currently generating about -0.01 per unit of volatility. If you would invest 302,500 in Hankuk Steel Wire on August 26, 2024 and sell it today you would lose (3,000) from holding Hankuk Steel Wire or give up 0.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tongyang vs. Hankuk Steel Wire
Performance |
| Timeline |
| Tongyang |
| Hankuk Steel Wire |
Tongyang and Hankuk Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tongyang and Hankuk Steel
The main advantage of trading using opposite Tongyang and Hankuk Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tongyang position performs unexpectedly, Hankuk Steel 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 Hankuk Steel will offset losses from the drop in Hankuk Steel's long position.| Tongyang vs. Hankuk Steel Wire | Tongyang vs. Sung Bo Chemicals | Tongyang vs. Korea Steel Co | Tongyang vs. Kukdong Oil Chemicals |
| Hankuk Steel vs. LG Chemicals | Hankuk Steel vs. Lotte Chemical Corp | Hankuk Steel vs. Hyundai Steel | Hankuk Steel vs. Korea Petro Chemical |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |