Correlation Between Husteel and Ni Steel
Can any of the company-specific risk be diversified away by investing in both Husteel and Ni 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 Husteel and Ni Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Husteel and Ni Steel, you can compare the effects of market volatilities on Husteel and Ni 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 Husteel with a short position of Ni Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Husteel and Ni Steel.
Diversification Opportunities for Husteel and Ni Steel
Modest diversification
The 3 months correlation between Husteel and 008260 is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Husteel and Ni Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ni Steel 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 Ni Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ni Steel has no effect on the direction of Husteel i.e., Husteel and Ni Steel go up and down completely randomly.
Pair Corralation between Husteel and Ni Steel
Assuming the 90 days trading horizon Husteel is expected to generate 0.52 times more return on investment than Ni Steel. However, Husteel is 1.91 times less risky than Ni Steel. It trades about 0.09 of its potential returns per unit of risk. Ni Steel is currently generating about 0.04 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Husteel vs. Ni Steel
Performance |
| Timeline |
| Husteel |
| Ni Steel |
Husteel and Ni Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Husteel and Ni Steel
The main advantage of trading using opposite Husteel and Ni Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Husteel position performs unexpectedly, Ni 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 Ni Steel will offset losses from the drop in Ni Steel's long position.| Husteel vs. LG Chemicals | Husteel vs. Lotte Chemical Corp | Husteel vs. Hyundai Steel | Husteel vs. Seah Steel Corp |
| Ni Steel vs. Jeju Air Co | Ni Steel vs. Daejoo Electronic Materials | Ni Steel vs. TOPMATERIAL LTD | Ni Steel vs. LAKE MATERIALS LTD |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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