Correlation Between J Steel and Hankook Steel
Can any of the company-specific risk be diversified away by investing in both J Steel 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 J Steel and Hankook Steel 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 Hankook Steel Co, you can compare the effects of market volatilities on J Steel 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 J Steel with a short position of Hankook Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of J Steel and Hankook Steel.
Diversification Opportunities for J Steel and Hankook Steel
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between 023440 and Hankook is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding J Steel Co and Hankook Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankook 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 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 J Steel i.e., J Steel and Hankook Steel go up and down completely randomly.
Pair Corralation between J Steel and Hankook Steel
Assuming the 90 days trading horizon J Steel Co is expected to under-perform the Hankook Steel. But the stock apears to be less risky and, when comparing its historical volatility, J Steel Co is 1.19 times less risky than Hankook Steel. The stock trades about -0.12 of its potential returns per unit of risk. The Hankook Steel Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 188,800 in Hankook Steel Co on September 13, 2024 and sell it today you would lose (1,800) from holding Hankook Steel Co or give up 0.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
J Steel Co vs. Hankook Steel Co
Performance |
| Timeline |
| J Steel |
| Hankook Steel |
J Steel and Hankook Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J Steel and Hankook Steel
The main advantage of trading using opposite J Steel and Hankook Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J Steel 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.| J Steel vs. Samsung Electronics Co | J Steel vs. Samsung Electronics Co | J Steel vs. LG Energy Solution | J Steel vs. SK Hynix |
| 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 Stocks Directory module to find actively traded stocks across global markets.
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