Correlation Between Wonil Special and Hankook Steel
Can any of the company-specific risk be diversified away by investing in both Wonil Special and Hankook 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 Hankook 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 Hankook Steel Co, you can compare the effects of market volatilities on Wonil Special and Hankook 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 Hankook Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonil Special and Hankook Steel.
Diversification Opportunities for Wonil Special and Hankook Steel
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Wonil and Hankook is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Wonil Special Steel and Hankook Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankook Steel 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 Hankook Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankook Steel has no effect on the direction of Wonil Special i.e., Wonil Special and Hankook Steel go up and down completely randomly.
Pair Corralation between Wonil Special and Hankook Steel
Assuming the 90 days trading horizon Wonil Special Steel is expected to under-perform the Hankook Steel. But the stock apears to be less risky and, when comparing its historical volatility, Wonil Special Steel is 3.3 times less risky than Hankook Steel. The stock trades about -0.11 of its potential returns per unit of risk. The Hankook Steel Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 198,800 in Hankook Steel Co on September 13, 2024 and sell it today you would lose (11,800) from holding Hankook Steel Co or give up 5.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wonil Special Steel vs. Hankook Steel Co
Performance |
| Timeline |
| Wonil Special Steel |
| Hankook Steel |
Wonil Special and Hankook Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wonil Special and Hankook Steel
The main advantage of trading using opposite Wonil Special and Hankook Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wonil Special position performs unexpectedly, Hankook 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 Hankook Steel will offset losses from the drop in Hankook Steel's long position.| Wonil Special vs. LG Chemicals | Wonil Special vs. POSCO Holdings | Wonil Special vs. Hanwha Solutions | Wonil Special vs. Lotte Chemical Corp |
| Hankook Steel vs. Display Tech Co | Hankook Steel vs. Ssangyong Information Communication | Hankook Steel vs. Korea Computer | Hankook Steel vs. Digital Power Communications |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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