Correlation Between HMM and Moonbae Steel
Can any of the company-specific risk be diversified away by investing in both HMM and Moonbae 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 HMM and Moonbae Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMM Co and Moonbae Steel, you can compare the effects of market volatilities on HMM and Moonbae 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 HMM with a short position of Moonbae Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMM and Moonbae Steel.
Diversification Opportunities for HMM and Moonbae Steel
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HMM and Moonbae is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding HMM Co and Moonbae Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moonbae Steel and HMM 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 HMM Co are associated (or correlated) with Moonbae Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moonbae Steel has no effect on the direction of HMM i.e., HMM and Moonbae Steel go up and down completely randomly.
Pair Corralation between HMM and Moonbae Steel
Assuming the 90 days trading horizon HMM Co is expected to generate 1.18 times more return on investment than Moonbae Steel. However, HMM is 1.18 times more volatile than Moonbae Steel. It trades about 0.02 of its potential returns per unit of risk. Moonbae Steel is currently generating about -0.03 per unit of risk. If you would invest 1,800,000 in HMM Co on August 29, 2024 and sell it today you would earn a total of 50,000 from holding HMM Co or generate 2.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HMM Co vs. Moonbae Steel
Performance |
| Timeline |
| HMM Co |
| Moonbae Steel |
HMM and Moonbae Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMM and Moonbae Steel
The main advantage of trading using opposite HMM and Moonbae Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMM position performs unexpectedly, Moonbae 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 Moonbae Steel will offset losses from the drop in Moonbae Steel's long position.The idea behind HMM Co and Moonbae Steel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Moonbae Steel vs. LG Chemicals | Moonbae Steel vs. Lotte Chemical Corp | Moonbae Steel vs. Hyundai Steel | Moonbae Steel vs. Seah Steel 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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