Correlation Between Korea Steel and J Steel
Can any of the company-specific risk be diversified away by investing in both Korea Steel and J 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 Korea Steel and J Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Steel Co and J Steel Co, you can compare the effects of market volatilities on Korea Steel and J 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 Korea Steel with a short position of J Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Steel and J Steel.
Diversification Opportunities for Korea Steel and J Steel
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and 023440 is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Korea Steel Co and J Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Steel and Korea 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 Korea Steel Co are associated (or correlated) with J Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Steel has no effect on the direction of Korea Steel i.e., Korea Steel and J Steel go up and down completely randomly.
Pair Corralation between Korea Steel and J Steel
Assuming the 90 days trading horizon Korea Steel Co is expected to under-perform the J Steel. But the stock apears to be less risky and, when comparing its historical volatility, Korea Steel Co is 3.6 times less risky than J Steel. The stock trades about -0.05 of its potential returns per unit of risk. The J Steel Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 280,000 in J Steel Co on August 29, 2024 and sell it today you would lose (92,200) from holding J Steel Co or give up 32.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Steel Co vs. J Steel Co
Performance |
| Timeline |
| Korea Steel |
| J Steel |
Korea Steel and J Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Steel and J Steel
The main advantage of trading using opposite Korea Steel and J Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Steel position performs unexpectedly, J 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 J Steel will offset losses from the drop in J Steel's long position.| Korea Steel vs. Moadata Co | Korea Steel vs. INNOX Advanced Materials | Korea Steel vs. Lotte Energy Materials | Korea Steel vs. Iljin Materials Co |
| J Steel vs. Samsung Electronics Co | J Steel vs. Samsung Electronics Co | J Steel vs. LG Energy Solution | J Steel vs. SK Hynix |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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