Correlation Between Korea Steel and System
Can any of the company-specific risk be diversified away by investing in both Korea Steel and System 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 System 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 System and Application, you can compare the effects of market volatilities on Korea Steel and System 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 System. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Steel and System.
Diversification Opportunities for Korea Steel and System
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and System is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Korea Steel Co and System and Application in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on System and Application 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 System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of System and Application has no effect on the direction of Korea Steel i.e., Korea Steel and System go up and down completely randomly.
Pair Corralation between Korea Steel and System
Assuming the 90 days trading horizon Korea Steel Co is expected to generate 0.44 times more return on investment than System. However, Korea Steel Co is 2.29 times less risky than System. It trades about -0.08 of its potential returns per unit of risk. System and Application is currently generating about -0.08 per unit of risk. If you would invest 168,300 in Korea Steel Co on November 8, 2024 and sell it today you would lose (3,600) from holding Korea Steel Co or give up 2.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Steel Co vs. System and Application
Performance |
| Timeline |
| Korea Steel |
| System and Application |
Korea Steel and System Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Steel and System
The main advantage of trading using opposite Korea Steel and System positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Steel position performs unexpectedly, System 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 System will offset losses from the drop in System's long position.| Korea Steel vs. Dong Il Steel | Korea Steel vs. Seah Steel Corp | Korea Steel vs. Ajusteel Co | Korea Steel vs. Ni Steel |
| System vs. SM Entertainment Co | System vs. JYP Entertainment Corp | System vs. Narae Nanotech Corp | System vs. Lion Chemtech Co |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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