Correlation Between Hyundai Steel and Hwangkum Steel
Can any of the company-specific risk be diversified away by investing in both Hyundai Steel and Hwangkum 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 Hwangkum 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 Hwangkum Steel Technology, you can compare the effects of market volatilities on Hyundai Steel and Hwangkum 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 Hwangkum Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Steel and Hwangkum Steel.
Diversification Opportunities for Hyundai Steel and Hwangkum Steel
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hyundai and Hwangkum is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Steel and Hwangkum Steel Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwangkum Steel Technology 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 Hwangkum Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwangkum Steel Technology has no effect on the direction of Hyundai Steel i.e., Hyundai Steel and Hwangkum Steel go up and down completely randomly.
Pair Corralation between Hyundai Steel and Hwangkum Steel
Assuming the 90 days trading horizon Hyundai Steel is expected to generate 2.19 times more return on investment than Hwangkum Steel. However, Hyundai Steel is 2.19 times more volatile than Hwangkum Steel Technology. It trades about 0.03 of its potential returns per unit of risk. Hwangkum Steel Technology is currently generating about -0.11 per unit of risk. If you would invest 2,195,000 in Hyundai Steel on September 13, 2024 and sell it today you would earn a total of 15,000 from holding Hyundai Steel or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Steel vs. Hwangkum Steel Technology
Performance |
| Timeline |
| Hyundai Steel |
| Hwangkum Steel Technology |
Hyundai Steel and Hwangkum Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Steel and Hwangkum Steel
The main advantage of trading using opposite Hyundai Steel and Hwangkum Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Steel position performs unexpectedly, Hwangkum 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 Hwangkum Steel will offset losses from the drop in Hwangkum Steel's long position.| Hyundai Steel vs. LG Chemicals | Hyundai Steel vs. POSCO Holdings | Hyundai Steel vs. Hanwha Solutions | Hyundai Steel vs. Lotte Chemical Corp |
| Hwangkum Steel vs. Samsung Electronics Co | Hwangkum Steel vs. Samsung Electronics Co | Hwangkum Steel vs. SK Hynix | Hwangkum Steel vs. POSCO Holdings |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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