Correlation Between Hyundai Steel and Husteel
Can any of the company-specific risk be diversified away by investing in both Hyundai 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 Hyundai Steel and Husteel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Steel and Husteel, you can compare the effects of market volatilities on Hyundai 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 Hyundai Steel with a short position of Husteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Steel and Husteel.
Diversification Opportunities for Hyundai Steel and Husteel
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hyundai and Husteel is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Steel and Husteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Husteel 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 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 Hyundai Steel i.e., Hyundai Steel and Husteel go up and down completely randomly.
Pair Corralation between Hyundai Steel and Husteel
Assuming the 90 days trading horizon Hyundai Steel is expected to under-perform the Husteel. But the stock apears to be less risky and, when comparing its historical volatility, Hyundai Steel is 1.26 times less risky than Husteel. The stock trades about -0.09 of its potential returns per unit of risk. The Husteel is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 481,801 in Husteel on August 29, 2024 and sell it today you would lose (68,801) from holding Husteel or give up 14.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Steel vs. Husteel
Performance |
| Timeline |
| Hyundai Steel |
| Husteel |
Hyundai Steel and Husteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Steel and Husteel
The main advantage of trading using opposite Hyundai Steel and Husteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai 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.| Hyundai Steel vs. LG Chemicals | Hyundai Steel vs. Lotte Chemical Corp | Hyundai Steel vs. Seah Steel Corp |
| 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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