Correlation Between Hyundai Steel and Wonil Special
Can any of the company-specific risk be diversified away by investing in both Hyundai Steel and Wonil Special 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 Wonil Special into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Steel and Wonil Special Steel, you can compare the effects of market volatilities on Hyundai Steel and Wonil Special 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 Wonil Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Steel and Wonil Special.
Diversification Opportunities for Hyundai Steel and Wonil Special
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and Wonil is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Steel and Wonil Special Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonil Special Steel 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 Wonil Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonil Special Steel has no effect on the direction of Hyundai Steel i.e., Hyundai Steel and Wonil Special go up and down completely randomly.
Pair Corralation between Hyundai Steel and Wonil Special
Assuming the 90 days trading horizon Hyundai Steel is expected to under-perform the Wonil Special. In addition to that, Hyundai Steel is 1.7 times more volatile than Wonil Special Steel. It trades about -0.06 of its total potential returns per unit of risk. Wonil Special Steel is currently generating about -0.07 per unit of volatility. If you would invest 989,740 in Wonil Special Steel on August 29, 2024 and sell it today you would lose (275,740) from holding Wonil Special Steel or give up 27.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Steel vs. Wonil Special Steel
Performance |
| Timeline |
| Hyundai Steel |
| Wonil Special Steel |
Hyundai Steel and Wonil Special Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Steel and Wonil Special
The main advantage of trading using opposite Hyundai Steel and Wonil Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Steel position performs unexpectedly, Wonil Special 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 Wonil Special will offset losses from the drop in Wonil Special's long position.| Hyundai Steel vs. LG Chemicals | Hyundai Steel vs. Lotte Chemical Corp | Hyundai Steel vs. Seah Steel Corp |
| Wonil Special vs. LG Chemicals | Wonil Special vs. Lotte Chemical Corp | Wonil Special vs. Hyundai Steel | Wonil Special 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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