Correlation Between Hyundai Steel and Dongkuk Steel
Can any of the company-specific risk be diversified away by investing in both Hyundai Steel and Dongkuk 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 Hyundai Steel and Dongkuk Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Steel and Dongkuk Steel Mill, you can compare the effects of market volatilities on Hyundai Steel and Dongkuk 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 Hyundai Steel with a short position of Dongkuk Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Steel and Dongkuk Steel.
Diversification Opportunities for Hyundai Steel and Dongkuk Steel
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hyundai and Dongkuk is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Steel and Dongkuk Steel Mill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongkuk Steel Mill and Hyundai 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 Hyundai Steel are associated (or correlated) with Dongkuk Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongkuk Steel Mill has no effect on the direction of Hyundai Steel i.e., Hyundai Steel and Dongkuk Steel go up and down completely randomly.
Pair Corralation between Hyundai Steel and Dongkuk Steel
Assuming the 90 days trading horizon Hyundai Steel is expected to under-perform the Dongkuk Steel. In addition to that, Hyundai Steel is 2.19 times more volatile than Dongkuk Steel Mill. It trades about -0.45 of its total potential returns per unit of risk. Dongkuk Steel Mill is currently generating about -0.39 per unit of volatility. If you would invest 800,000 in Dongkuk Steel Mill on August 25, 2024 and sell it today you would lose (64,000) from holding Dongkuk Steel Mill or give up 8.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hyundai Steel vs. Dongkuk Steel Mill
Performance |
| Timeline |
| Hyundai Steel |
| Dongkuk Steel Mill |
Hyundai Steel and Dongkuk Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Steel and Dongkuk Steel
The main advantage of trading using opposite Hyundai Steel and Dongkuk Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Steel position performs unexpectedly, Dongkuk 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 Dongkuk Steel will offset losses from the drop in Dongkuk Steel's long position.| Hyundai Steel vs. iNtRON Biotechnology | Hyundai Steel vs. FOODWELL Co | Hyundai Steel vs. Haitai Confectionery Foods | Hyundai Steel vs. GS Retail Co |
| Dongkuk Steel vs. LG Chemicals | Dongkuk Steel vs. POSCO Holdings | Dongkuk Steel vs. Lotte Chemical Corp | Dongkuk Steel vs. Hyundai Steel |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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