Correlation Between Hankuk Steel and Samsung SDI
Can any of the company-specific risk be diversified away by investing in both Hankuk Steel and Samsung SDI 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 Hankuk Steel and Samsung SDI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hankuk Steel Wire and Samsung SDI, you can compare the effects of market volatilities on Hankuk Steel and Samsung SDI 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 Hankuk Steel with a short position of Samsung SDI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankuk Steel and Samsung SDI.
Diversification Opportunities for Hankuk Steel and Samsung SDI
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hankuk and Samsung is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Hankuk Steel Wire and Samsung SDI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung SDI and Hankuk 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 Hankuk Steel Wire are associated (or correlated) with Samsung SDI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung SDI has no effect on the direction of Hankuk Steel i.e., Hankuk Steel and Samsung SDI go up and down completely randomly.
Pair Corralation between Hankuk Steel and Samsung SDI
Assuming the 90 days trading horizon Hankuk Steel Wire is expected to generate 1.39 times more return on investment than Samsung SDI. However, Hankuk Steel is 1.39 times more volatile than Samsung SDI. It trades about 0.07 of its potential returns per unit of risk. Samsung SDI is currently generating about -0.36 per unit of risk. If you would invest 406,000 in Hankuk Steel Wire on November 6, 2024 and sell it today you would earn a total of 13,000 from holding Hankuk Steel Wire or generate 3.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Hankuk Steel Wire vs. Samsung SDI
Performance |
| Timeline |
| Hankuk Steel Wire |
| Samsung SDI |
Hankuk Steel and Samsung SDI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankuk Steel and Samsung SDI
The main advantage of trading using opposite Hankuk Steel and Samsung SDI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankuk Steel position performs unexpectedly, Samsung SDI 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 Samsung SDI will offset losses from the drop in Samsung SDI's long position.| Hankuk Steel vs. Hanmi Semiconductor Co | Hankuk Steel vs. BGF Retail Co | Hankuk Steel vs. Daejung Chemicals Metals | Hankuk Steel vs. ABOV Semiconductor Co |
| Samsung SDI vs. Chorokbaem Healthcare Co | Samsung SDI vs. LG Household Healthcare | Samsung SDI vs. Insung Information Co | Samsung SDI vs. BGF Retail 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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