Correlation Between Ssangyong Information and Hankuk Steel
Can any of the company-specific risk be diversified away by investing in both Ssangyong Information and Hankuk 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 Ssangyong Information and Hankuk Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ssangyong Information Communication and Hankuk Steel Wire, you can compare the effects of market volatilities on Ssangyong Information and Hankuk 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 Ssangyong Information with a short position of Hankuk Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ssangyong Information and Hankuk Steel.
Diversification Opportunities for Ssangyong Information and Hankuk Steel
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ssangyong and Hankuk is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ssangyong Information Communic and Hankuk Steel Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankuk Steel Wire and Ssangyong Information 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 Ssangyong Information Communication are associated (or correlated) with Hankuk Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankuk Steel Wire has no effect on the direction of Ssangyong Information i.e., Ssangyong Information and Hankuk Steel go up and down completely randomly.
Pair Corralation between Ssangyong Information and Hankuk Steel
Assuming the 90 days trading horizon Ssangyong Information Communication is expected to under-perform the Hankuk Steel. But the stock apears to be less risky and, when comparing its historical volatility, Ssangyong Information Communication is 4.22 times less risky than Hankuk Steel. The stock trades about -0.13 of its potential returns per unit of risk. The Hankuk Steel Wire is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 406,000 in Hankuk Steel Wire on November 7, 2024 and sell it today you would earn a total of 13,000 from holding Hankuk Steel Wire or generate 3.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ssangyong Information Communic vs. Hankuk Steel Wire
Performance |
| Timeline |
| Ssangyong Information |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| Hankuk Steel Wire |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Ssangyong Information and Hankuk Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ssangyong Information and Hankuk Steel
The main advantage of trading using opposite Ssangyong Information and Hankuk Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ssangyong Information position performs unexpectedly, Hankuk 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 Hankuk Steel will offset losses from the drop in Hankuk Steel's long position.| Ssangyong Information vs. Bosung Power Technology | Ssangyong Information vs. Neungyule Education | Ssangyong Information vs. Samsung Publishing Co | Ssangyong Information vs. Seoul Semiconductor Co |
| Hankuk Steel vs. A Tech Solution Co | Hankuk Steel vs. Orbitech Co | Hankuk Steel vs. Hansol Chemical Co | Hankuk Steel vs. Narae Nanotech 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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