Correlation Between Husteel and Cytogen
Can any of the company-specific risk be diversified away by investing in both Husteel and Cytogen 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 Cytogen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Husteel and Cytogen, you can compare the effects of market volatilities on Husteel and Cytogen 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 Cytogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Husteel and Cytogen.
Diversification Opportunities for Husteel and Cytogen
Poor diversification
The 3 months correlation between Husteel and Cytogen is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Husteel and Cytogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cytogen 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 Cytogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cytogen has no effect on the direction of Husteel i.e., Husteel and Cytogen go up and down completely randomly.
Pair Corralation between Husteel and Cytogen
Assuming the 90 days trading horizon Husteel is expected to generate 0.42 times more return on investment than Cytogen. However, Husteel is 2.37 times less risky than Cytogen. It trades about -0.21 of its potential returns per unit of risk. Cytogen is currently generating about -0.32 per unit of risk. If you would invest 424,000 in Husteel on September 12, 2024 and sell it today you would lose (50,500) from holding Husteel or give up 11.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Husteel vs. Cytogen
Performance |
| Timeline |
| Husteel |
| Cytogen |
Husteel and Cytogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Husteel and Cytogen
The main advantage of trading using opposite Husteel and Cytogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Husteel position performs unexpectedly, Cytogen 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 Cytogen will offset losses from the drop in Cytogen's long position.| Husteel vs. LG Chemicals | Husteel vs. POSCO Holdings | Husteel vs. Hanwha Solutions | Husteel vs. Lotte Chemical Corp |
| Cytogen vs. YG Entertainment | Cytogen vs. Tamul Multimedia Co | Cytogen vs. J Steel Co | Cytogen vs. Husteel |
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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