Correlation Between Samhyun Steel and Kwang Jin
Can any of the company-specific risk be diversified away by investing in both Samhyun Steel and Kwang Jin 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 Samhyun Steel and Kwang Jin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samhyun Steel Co and Kwang Jin Ind, you can compare the effects of market volatilities on Samhyun Steel and Kwang Jin 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 Samhyun Steel with a short position of Kwang Jin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samhyun Steel and Kwang Jin.
Diversification Opportunities for Samhyun Steel and Kwang Jin
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Samhyun and Kwang is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Samhyun Steel Co and Kwang Jin Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kwang Jin Ind and Samhyun Steel 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 Samhyun Steel Co are associated (or correlated) with Kwang Jin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kwang Jin Ind has no effect on the direction of Samhyun Steel i.e., Samhyun Steel and Kwang Jin go up and down completely randomly.
Pair Corralation between Samhyun Steel and Kwang Jin
Assuming the 90 days trading horizon Samhyun Steel is expected to generate 3.52 times less return on investment than Kwang Jin. But when comparing it to its historical volatility, Samhyun Steel Co is 1.17 times less risky than Kwang Jin. It trades about 0.06 of its potential returns per unit of risk. Kwang Jin Ind is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 195,400 in Kwang Jin Ind on September 26, 2024 and sell it today you would earn a total of 13,100 from holding Kwang Jin Ind or generate 6.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samhyun Steel Co vs. Kwang Jin Ind
Performance |
| Timeline |
| Samhyun Steel |
| Kwang Jin Ind |
Samhyun Steel and Kwang Jin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samhyun Steel and Kwang Jin
The main advantage of trading using opposite Samhyun Steel and Kwang Jin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samhyun Steel position performs unexpectedly, Kwang Jin 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 Kwang Jin will offset losses from the drop in Kwang Jin's long position.| Samhyun Steel vs. Keum Kang Steel | Samhyun Steel vs. Tplex Co | Samhyun Steel vs. PJ Metal Co | Samhyun Steel vs. Gyeongnam Steel Co |
| Kwang Jin vs. Wonil Special Steel | Kwang Jin vs. Bookook Steel | Kwang Jin vs. Kyeryong Construction Industrial | Kwang Jin vs. Hironic 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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