Correlation Between Seoul Food and Hwangkum Steel
Can any of the company-specific risk be diversified away by investing in both Seoul Food 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 Seoul Food and Hwangkum Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoul Food Industrial and Hwangkum Steel Technology, you can compare the effects of market volatilities on Seoul Food 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 Seoul Food with a short position of Hwangkum Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and Hwangkum Steel.
Diversification Opportunities for Seoul Food and Hwangkum Steel
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Seoul and Hwangkum is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial 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 Seoul Food 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 Seoul Food Industrial 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 Seoul Food i.e., Seoul Food and Hwangkum Steel go up and down completely randomly.
Pair Corralation between Seoul Food and Hwangkum Steel
Assuming the 90 days trading horizon Seoul Food Industrial is expected to under-perform the Hwangkum Steel. But the stock apears to be less risky and, when comparing its historical volatility, Seoul Food Industrial is 1.31 times less risky than Hwangkum Steel. The stock trades about -0.04 of its potential returns per unit of risk. The Hwangkum Steel Technology is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 695,014 in Hwangkum Steel Technology on October 14, 2024 and sell it today you would lose (197,014) from holding Hwangkum Steel Technology or give up 28.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Food Industrial vs. Hwangkum Steel Technology
Performance |
| Timeline |
| Seoul Food Industrial |
| Hwangkum Steel Technology |
Seoul Food and Hwangkum Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Food and Hwangkum Steel
The main advantage of trading using opposite Seoul Food and Hwangkum Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Food 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.| Seoul Food vs. Digital Imaging Technology | Seoul Food vs. HB Technology TD | Seoul Food vs. Ssangyong Materials Corp | Seoul Food vs. Korea Shipbuilding Offshore |
| Hwangkum Steel vs. Seoul Food Industrial | Hwangkum Steel vs. Heungkuk Metaltech CoLtd | Hwangkum Steel vs. Playgram Co | Hwangkum Steel vs. Seoyon Topmetal Co |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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