Correlation Between Automobile and Samhyun Steel
Can any of the company-specific risk be diversified away by investing in both Automobile and Samhyun 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 Automobile and Samhyun Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automobile Pc and Samhyun Steel Co, you can compare the effects of market volatilities on Automobile and Samhyun 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 Automobile with a short position of Samhyun Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and Samhyun Steel.
Diversification Opportunities for Automobile and Samhyun Steel
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Automobile and Samhyun is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and Samhyun Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samhyun Steel and Automobile 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 Automobile Pc are associated (or correlated) with Samhyun Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samhyun Steel has no effect on the direction of Automobile i.e., Automobile and Samhyun Steel go up and down completely randomly.
Pair Corralation between Automobile and Samhyun Steel
Assuming the 90 days trading horizon Automobile Pc is expected to generate 3.63 times more return on investment than Samhyun Steel. However, Automobile is 3.63 times more volatile than Samhyun Steel Co. It trades about 0.04 of its potential returns per unit of risk. Samhyun Steel Co is currently generating about -0.01 per unit of risk. If you would invest 68,000 in Automobile Pc on August 29, 2024 and sell it today you would earn a total of 1,000.00 from holding Automobile Pc or generate 1.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automobile Pc vs. Samhyun Steel Co
Performance |
| Timeline |
| Automobile Pc |
| Samhyun Steel |
Automobile and Samhyun Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automobile and Samhyun Steel
The main advantage of trading using opposite Automobile and Samhyun Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile position performs unexpectedly, Samhyun 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 Samhyun Steel will offset losses from the drop in Samhyun Steel's long position.| Automobile vs. Busan Industrial Co | Automobile vs. Busan Ind | Automobile vs. Mirae Asset Daewoo | Automobile vs. UNISEM Co |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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