Correlation Between SH Energy and Hankook Steel
Can any of the company-specific risk be diversified away by investing in both SH Energy and Hankook 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 SH Energy and Hankook Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SH Energy Chemical and Hankook Steel Co, you can compare the effects of market volatilities on SH Energy and Hankook 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 SH Energy with a short position of Hankook Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of SH Energy and Hankook Steel.
Diversification Opportunities for SH Energy and Hankook Steel
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 002360 and Hankook is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding SH Energy Chemical and Hankook Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankook Steel and SH Energy 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 SH Energy Chemical are associated (or correlated) with Hankook Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankook Steel has no effect on the direction of SH Energy i.e., SH Energy and Hankook Steel go up and down completely randomly.
Pair Corralation between SH Energy and Hankook Steel
Assuming the 90 days trading horizon SH Energy is expected to generate 1.23 times less return on investment than Hankook Steel. But when comparing it to its historical volatility, SH Energy Chemical is 1.93 times less risky than Hankook Steel. It trades about 0.08 of its potential returns per unit of risk. Hankook Steel Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 198,500 in Hankook Steel Co on September 5, 2024 and sell it today you would earn a total of 6,000 from holding Hankook Steel Co or generate 3.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SH Energy Chemical vs. Hankook Steel Co
Performance |
| Timeline |
| SH Energy Chemical |
| Hankook Steel |
SH Energy and Hankook Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SH Energy and Hankook Steel
The main advantage of trading using opposite SH Energy and Hankook Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SH Energy position performs unexpectedly, Hankook 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 Hankook Steel will offset losses from the drop in Hankook Steel's long position.| SH Energy vs. AptaBio Therapeutics | SH Energy vs. Daewoo SBI SPAC | SH Energy vs. Dream Security co | SH Energy vs. Microfriend |
| Hankook Steel vs. AptaBio Therapeutics | Hankook Steel vs. Daewoo SBI SPAC | Hankook Steel vs. Dream Security co | Hankook Steel vs. Microfriend |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |