Correlation Between Hanil Iron and TK Chemical
Can any of the company-specific risk be diversified away by investing in both Hanil Iron and TK 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 Hanil Iron and TK Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanil Iron Steel and TK Chemical, you can compare the effects of market volatilities on Hanil Iron and TK 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 Hanil Iron with a short position of TK Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanil Iron and TK Chemical.
Diversification Opportunities for Hanil Iron and TK Chemical
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hanil and 104480 is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Hanil Iron Steel and TK Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TK Chemical and Hanil Iron 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 Hanil Iron Steel are associated (or correlated) with TK Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TK Chemical has no effect on the direction of Hanil Iron i.e., Hanil Iron and TK Chemical go up and down completely randomly.
Pair Corralation between Hanil Iron and TK Chemical
Assuming the 90 days trading horizon Hanil Iron Steel is expected to generate 0.89 times more return on investment than TK Chemical. However, Hanil Iron Steel is 1.12 times less risky than TK Chemical. It trades about -0.05 of its potential returns per unit of risk. TK Chemical is currently generating about -0.08 per unit of risk. If you would invest 245,000 in Hanil Iron Steel on August 28, 2024 and sell it today you would lose (41,000) from holding Hanil Iron Steel or give up 16.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanil Iron Steel vs. TK Chemical
Performance |
| Timeline |
| Hanil Iron Steel |
| TK Chemical |
Hanil Iron and TK Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanil Iron and TK Chemical
The main advantage of trading using opposite Hanil Iron and TK Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanil Iron position performs unexpectedly, TK 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 TK Chemical will offset losses from the drop in TK Chemical's long position.| Hanil Iron vs. LS Materials | Hanil Iron vs. Hyosung Advanced Materials | Hanil Iron vs. NH Investment Securities | Hanil Iron vs. PI Advanced Materials |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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