Correlation Between Hanil Chemical and Dongkuk Steel
Can any of the company-specific risk be diversified away by investing in both Hanil Chemical and Dongkuk 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 Hanil Chemical and Dongkuk Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanil Chemical Ind and Dongkuk Steel Mill, you can compare the effects of market volatilities on Hanil Chemical and Dongkuk 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 Hanil Chemical with a short position of Dongkuk Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanil Chemical and Dongkuk Steel.
Diversification Opportunities for Hanil Chemical and Dongkuk Steel
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanil and Dongkuk is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Hanil Chemical Ind and Dongkuk Steel Mill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongkuk Steel Mill and Hanil Chemical 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 Hanil Chemical Ind are associated (or correlated) with Dongkuk Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongkuk Steel Mill has no effect on the direction of Hanil Chemical i.e., Hanil Chemical and Dongkuk Steel go up and down completely randomly.
Pair Corralation between Hanil Chemical and Dongkuk Steel
Assuming the 90 days trading horizon Hanil Chemical Ind is expected to under-perform the Dongkuk Steel. In addition to that, Hanil Chemical is 1.88 times more volatile than Dongkuk Steel Mill. It trades about -0.05 of its total potential returns per unit of risk. Dongkuk Steel Mill is currently generating about -0.08 per unit of volatility. If you would invest 806,000 in Dongkuk Steel Mill on November 2, 2024 and sell it today you would lose (69,000) from holding Dongkuk Steel Mill or give up 8.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanil Chemical Ind vs. Dongkuk Steel Mill
Performance |
| Timeline |
| Hanil Chemical Ind |
| Dongkuk Steel Mill |
Hanil Chemical and Dongkuk Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanil Chemical and Dongkuk Steel
The main advantage of trading using opposite Hanil Chemical and Dongkuk Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanil Chemical position performs unexpectedly, Dongkuk 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 Dongkuk Steel will offset losses from the drop in Dongkuk Steel's long position.| Hanil Chemical vs. Daejoo Electronic Materials | Hanil Chemical vs. Foodnamoo | Hanil Chemical vs. LAKE MATERIALS LTD | Hanil Chemical vs. National Plastic Co |
| Dongkuk Steel vs. LG Chemicals | Dongkuk Steel vs. POSCO Holdings | Dongkuk Steel vs. Hanwha Solutions | Dongkuk Steel vs. Lotte Chemical Corp |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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