Correlation Between Husteel and Korean Reinsurance
Can any of the company-specific risk be diversified away by investing in both Husteel and Korean Reinsurance 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 Husteel and Korean Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Husteel and Korean Reinsurance Co, you can compare the effects of market volatilities on Husteel and Korean Reinsurance 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 Husteel with a short position of Korean Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Husteel and Korean Reinsurance.
Diversification Opportunities for Husteel and Korean Reinsurance
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Husteel and Korean is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Husteel and Korean Reinsurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Reinsurance and Husteel 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 Husteel are associated (or correlated) with Korean Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Reinsurance has no effect on the direction of Husteel i.e., Husteel and Korean Reinsurance go up and down completely randomly.
Pair Corralation between Husteel and Korean Reinsurance
Assuming the 90 days trading horizon Husteel is expected to generate 1.65 times more return on investment than Korean Reinsurance. However, Husteel is 1.65 times more volatile than Korean Reinsurance Co. It trades about 0.09 of its potential returns per unit of risk. Korean Reinsurance Co is currently generating about 0.15 per unit of risk. If you would invest 399,500 in Husteel on August 29, 2024 and sell it today you would earn a total of 13,500 from holding Husteel or generate 3.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Husteel vs. Korean Reinsurance Co
Performance |
| Timeline |
| Husteel |
| Korean Reinsurance |
Husteel and Korean Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Husteel and Korean Reinsurance
The main advantage of trading using opposite Husteel and Korean Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Husteel position performs unexpectedly, Korean Reinsurance 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 Korean Reinsurance will offset losses from the drop in Korean Reinsurance's long position.| Husteel vs. LG Chemicals | Husteel vs. Lotte Chemical Corp | Husteel vs. Hyundai Steel | Husteel vs. Seah Steel Corp |
| Korean Reinsurance vs. AptaBio Therapeutics | Korean Reinsurance vs. Daewoo SBI SPAC | Korean Reinsurance vs. Dream Security co | Korean Reinsurance vs. Microfriend |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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