Correlation Between Choil Aluminum and Hankook Steel
Can any of the company-specific risk be diversified away by investing in both Choil Aluminum 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 Choil Aluminum and Hankook Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Choil Aluminum and Hankook Steel Co, you can compare the effects of market volatilities on Choil Aluminum 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 Choil Aluminum with a short position of Hankook Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choil Aluminum and Hankook Steel.
Diversification Opportunities for Choil Aluminum and Hankook Steel
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Choil and Hankook is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Choil Aluminum and Hankook Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankook Steel and Choil Aluminum 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 Choil Aluminum 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 Choil Aluminum i.e., Choil Aluminum and Hankook Steel go up and down completely randomly.
Pair Corralation between Choil Aluminum and Hankook Steel
Assuming the 90 days trading horizon Choil Aluminum is expected to generate 0.8 times more return on investment than Hankook Steel. However, Choil Aluminum is 1.25 times less risky than Hankook Steel. It trades about 0.23 of its potential returns per unit of risk. Hankook Steel Co is currently generating about -0.24 per unit of risk. If you would invest 141,400 in Choil Aluminum on November 3, 2024 and sell it today you would earn a total of 6,400 from holding Choil Aluminum or generate 4.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choil Aluminum vs. Hankook Steel Co
Performance |
| Timeline |
| Choil Aluminum |
| Hankook Steel |
Choil Aluminum and Hankook Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choil Aluminum and Hankook Steel
The main advantage of trading using opposite Choil Aluminum and Hankook Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choil Aluminum 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.| Choil Aluminum vs. AeroSpace Technology of | Choil Aluminum vs. Busan Industrial Co | Choil Aluminum vs. Busan Ind | Choil Aluminum vs. Mirae Asset Daewoo |
| Hankook Steel vs. Seers Technology | Hankook Steel vs. NewFlex Technology Co | Hankook Steel vs. Kisan Telecom Co | Hankook Steel vs. Seoul Electronics Telecom |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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