Correlation Between Seah Steel and Husteel
Can any of the company-specific risk be diversified away by investing in both Seah Steel and Husteel 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 Seah Steel and Husteel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seah Steel Corp and Husteel, you can compare the effects of market volatilities on Seah Steel and Husteel 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 Seah Steel with a short position of Husteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seah Steel and Husteel.
Diversification Opportunities for Seah Steel and Husteel
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Seah and Husteel is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Seah Steel Corp and Husteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Husteel and Seah Steel 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 Seah Steel Corp are associated (or correlated) with Husteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Husteel has no effect on the direction of Seah Steel i.e., Seah Steel and Husteel go up and down completely randomly.
Pair Corralation between Seah Steel and Husteel
Assuming the 90 days trading horizon Seah Steel Corp is expected to generate 1.11 times more return on investment than Husteel. However, Seah Steel is 1.11 times more volatile than Husteel. It trades about 0.0 of its potential returns per unit of risk. Husteel is currently generating about -0.01 per unit of risk. If you would invest 19,104,200 in Seah Steel Corp on August 29, 2024 and sell it today you would lose (1,804,200) from holding Seah Steel Corp or give up 9.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seah Steel Corp vs. Husteel
Performance |
| Timeline |
| Seah Steel Corp |
| Husteel |
Seah Steel and Husteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seah Steel and Husteel
The main advantage of trading using opposite Seah Steel and Husteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seah Steel position performs unexpectedly, Husteel 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 Husteel will offset losses from the drop in Husteel's long position.The idea behind Seah Steel Corp and Husteel 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.| Husteel vs. LG Chemicals | Husteel vs. Lotte Chemical Corp | Husteel vs. Hyundai Steel | Husteel vs. Seah Steel 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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