Correlation Between J Steel and Han Kook
Can any of the company-specific risk be diversified away by investing in both J Steel and Han Kook 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 J Steel and Han Kook into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between J Steel Co and Han Kook Steel, you can compare the effects of market volatilities on J Steel and Han Kook 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 J Steel with a short position of Han Kook. Check out your portfolio center. Please also check ongoing floating volatility patterns of J Steel and Han Kook.
Diversification Opportunities for J Steel and Han Kook
Good diversification
The 3 months correlation between 023440 and Han is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding J Steel Co and Han Kook Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Han Kook Steel and J 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 J Steel Co are associated (or correlated) with Han Kook. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Han Kook Steel has no effect on the direction of J Steel i.e., J Steel and Han Kook go up and down completely randomly.
Pair Corralation between J Steel and Han Kook
Assuming the 90 days trading horizon J Steel is expected to generate 2.87 times less return on investment than Han Kook. But when comparing it to its historical volatility, J Steel Co is 1.18 times less risky than Han Kook. It trades about 0.04 of its potential returns per unit of risk. Han Kook Steel is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 198,300 in Han Kook Steel on September 2, 2024 and sell it today you would earn a total of 17,200 from holding Han Kook Steel or generate 8.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
J Steel Co vs. Han Kook Steel
Performance |
| Timeline |
| J Steel |
| Han Kook Steel |
J Steel and Han Kook Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J Steel and Han Kook
The main advantage of trading using opposite J Steel and Han Kook positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J Steel position performs unexpectedly, Han Kook 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 Han Kook will offset losses from the drop in Han Kook's long position.| J Steel vs. Samsung Electronics Co | J Steel vs. Samsung Electronics Co | J Steel vs. LG Energy Solution | J Steel vs. SK Hynix |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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