Correlation Between Daewoo Electronic and Hwangkum Steel
Can any of the company-specific risk be diversified away by investing in both Daewoo Electronic and Hwangkum 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 Daewoo Electronic and Hwangkum Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo Electronic Components and Hwangkum Steel Technology, you can compare the effects of market volatilities on Daewoo Electronic and Hwangkum 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 Daewoo Electronic with a short position of Hwangkum Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo Electronic and Hwangkum Steel.
Diversification Opportunities for Daewoo Electronic and Hwangkum Steel
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daewoo and Hwangkum is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo Electronic Components and Hwangkum Steel Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwangkum Steel Technology and Daewoo Electronic 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 Daewoo Electronic Components are associated (or correlated) with Hwangkum Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwangkum Steel Technology has no effect on the direction of Daewoo Electronic i.e., Daewoo Electronic and Hwangkum Steel go up and down completely randomly.
Pair Corralation between Daewoo Electronic and Hwangkum Steel
Assuming the 90 days trading horizon Daewoo Electronic Components is expected to generate 1.43 times more return on investment than Hwangkum Steel. However, Daewoo Electronic is 1.43 times more volatile than Hwangkum Steel Technology. It trades about -0.05 of its potential returns per unit of risk. Hwangkum Steel Technology is currently generating about -0.09 per unit of risk. If you would invest 154,500 in Daewoo Electronic Components on October 27, 2024 and sell it today you would lose (53,000) from holding Daewoo Electronic Components or give up 34.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo Electronic Components vs. Hwangkum Steel Technology
Performance |
| Timeline |
| Daewoo Electronic |
| Hwangkum Steel Technology |
Daewoo Electronic and Hwangkum Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo Electronic and Hwangkum Steel
The main advantage of trading using opposite Daewoo Electronic and Hwangkum Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo Electronic position performs unexpectedly, Hwangkum 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 Hwangkum Steel will offset losses from the drop in Hwangkum Steel's long position.| Daewoo Electronic vs. Samsung Electronics Co | Daewoo Electronic vs. Samsung Electronics Co | Daewoo Electronic vs. LG Energy Solution | Daewoo Electronic vs. SK Hynix |
| Hwangkum Steel vs. ECSTELECOM Co | Hwangkum Steel vs. PLAYWITH | Hwangkum Steel vs. PJ Metal Co | Hwangkum Steel vs. Lotte Data Communication |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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