Correlation Between Wonil Special and Hankuk Steel
Can any of the company-specific risk be diversified away by investing in both Wonil Special 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 Wonil Special and Hankuk Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wonil Special Steel and Hankuk Steel Wire, you can compare the effects of market volatilities on Wonil Special 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 Wonil Special with a short position of Hankuk Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonil Special and Hankuk Steel.
Diversification Opportunities for Wonil Special and Hankuk Steel
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wonil and Hankuk is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Wonil Special Steel 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 Wonil Special 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 Wonil Special Steel 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 Wonil Special i.e., Wonil Special and Hankuk Steel go up and down completely randomly.
Pair Corralation between Wonil Special and Hankuk Steel
Assuming the 90 days trading horizon Wonil Special Steel is expected to generate 0.81 times more return on investment than Hankuk Steel. However, Wonil Special Steel is 1.23 times less risky than Hankuk Steel. It trades about -0.06 of its potential returns per unit of risk. Hankuk Steel Wire is currently generating about -0.06 per unit of risk. If you would invest 865,900 in Wonil Special Steel on September 2, 2024 and sell it today you would lose (137,900) from holding Wonil Special Steel or give up 15.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wonil Special Steel vs. Hankuk Steel Wire
Performance |
| Timeline |
| Wonil Special Steel |
| Hankuk Steel Wire |
Wonil Special and Hankuk Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wonil Special and Hankuk Steel
The main advantage of trading using opposite Wonil Special and Hankuk Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wonil Special 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.| Wonil Special vs. LG Chemicals | Wonil Special vs. POSCO Holdings | Wonil Special vs. Hanwha Solutions | Wonil Special vs. Hyundai Steel |
| Hankuk Steel vs. LG Chemicals | Hankuk Steel vs. POSCO Holdings | Hankuk Steel vs. Hanwha Solutions | Hankuk Steel vs. Hyundai Steel |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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