Correlation Between Hanwha Solutions and Hyundai Steel
Can any of the company-specific risk be diversified away by investing in both Hanwha Solutions and Hyundai 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 Hanwha Solutions and Hyundai Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha Solutions and Hyundai Steel, you can compare the effects of market volatilities on Hanwha Solutions and Hyundai 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 Hanwha Solutions with a short position of Hyundai Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Solutions and Hyundai Steel.
Diversification Opportunities for Hanwha Solutions and Hyundai Steel
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hanwha and Hyundai is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Solutions and Hyundai Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Steel and Hanwha Solutions 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 Hanwha Solutions are associated (or correlated) with Hyundai Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Steel has no effect on the direction of Hanwha Solutions i.e., Hanwha Solutions and Hyundai Steel go up and down completely randomly.
Pair Corralation between Hanwha Solutions and Hyundai Steel
Assuming the 90 days trading horizon Hanwha Solutions is expected to under-perform the Hyundai Steel. In addition to that, Hanwha Solutions is 1.58 times more volatile than Hyundai Steel. It trades about -0.04 of its total potential returns per unit of risk. Hyundai Steel is currently generating about -0.02 per unit of volatility. If you would invest 3,261,779 in Hyundai Steel on November 2, 2024 and sell it today you would lose (916,779) from holding Hyundai Steel or give up 28.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanwha Solutions vs. Hyundai Steel
Performance |
| Timeline |
| Hanwha Solutions |
| Hyundai Steel |
Hanwha Solutions and Hyundai Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Solutions and Hyundai Steel
The main advantage of trading using opposite Hanwha Solutions and Hyundai Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Solutions position performs unexpectedly, Hyundai 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 Hyundai Steel will offset losses from the drop in Hyundai Steel's long position.| Hanwha Solutions vs. Duksan Hi Metal | Hanwha Solutions vs. Insung Information Co | Hanwha Solutions vs. Nice Information Telecommunication | Hanwha Solutions vs. Union Materials Corp |
| Hyundai Steel vs. Lotte Fine Chemical | Hyundai Steel vs. Kg Chemical | Hyundai Steel vs. Tae Kyung Chemical | Hyundai Steel vs. Adaptive Plasma Technology |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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