Correlation Between Korea Steel and Hansol Homedeco
Can any of the company-specific risk be diversified away by investing in both Korea Steel and Hansol Homedeco 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 Hansol Homedeco 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 Hansol Homedeco Co, you can compare the effects of market volatilities on Korea Steel and Hansol Homedeco 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 Hansol Homedeco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Steel and Hansol Homedeco.
Diversification Opportunities for Korea Steel and Hansol Homedeco
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Hansol is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Korea Steel Co and Hansol Homedeco Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansol Homedeco 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 Hansol Homedeco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansol Homedeco has no effect on the direction of Korea Steel i.e., Korea Steel and Hansol Homedeco go up and down completely randomly.
Pair Corralation between Korea Steel and Hansol Homedeco
Assuming the 90 days trading horizon Korea Steel Co is expected to under-perform the Hansol Homedeco. But the stock apears to be less risky and, when comparing its historical volatility, Korea Steel Co is 1.16 times less risky than Hansol Homedeco. The stock trades about -0.13 of its potential returns per unit of risk. The Hansol Homedeco Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 77,100 in Hansol Homedeco Co on August 25, 2024 and sell it today you would lose (10,800) from holding Hansol Homedeco Co or give up 14.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Steel Co vs. Hansol Homedeco Co
Performance |
| Timeline |
| Korea Steel |
| Hansol Homedeco |
Korea Steel and Hansol Homedeco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Steel and Hansol Homedeco
The main advantage of trading using opposite Korea Steel and Hansol Homedeco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Steel position performs unexpectedly, Hansol Homedeco 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 Hansol Homedeco will offset losses from the drop in Hansol Homedeco's long position.| Korea Steel vs. Dong Il Steel | Korea Steel vs. Seah Steel Corp | Korea Steel vs. Ajusteel Co | Korea Steel vs. Samwon Steel |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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