Correlation Between Hankuk Steel and Kukdong Oil
Can any of the company-specific risk be diversified away by investing in both Hankuk Steel and Kukdong Oil 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 Kukdong Oil 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 Kukdong Oil Chemicals, you can compare the effects of market volatilities on Hankuk Steel and Kukdong Oil 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 Kukdong Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankuk Steel and Kukdong Oil.
Diversification Opportunities for Hankuk Steel and Kukdong Oil
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hankuk and Kukdong is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Hankuk Steel Wire and Kukdong Oil Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukdong Oil Chemicals 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 Kukdong Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukdong Oil Chemicals has no effect on the direction of Hankuk Steel i.e., Hankuk Steel and Kukdong Oil go up and down completely randomly.
Pair Corralation between Hankuk Steel and Kukdong Oil
Assuming the 90 days trading horizon Hankuk Steel Wire is expected to generate 10.46 times more return on investment than Kukdong Oil. However, Hankuk Steel is 10.46 times more volatile than Kukdong Oil Chemicals. It trades about 0.03 of its potential returns per unit of risk. Kukdong Oil Chemicals is currently generating about -0.23 per unit of risk. If you would invest 413,000 in Hankuk Steel Wire on November 1, 2024 and sell it today you would earn a total of 2,000 from holding Hankuk Steel Wire or generate 0.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hankuk Steel Wire vs. Kukdong Oil Chemicals
Performance |
| Timeline |
| Hankuk Steel Wire |
| Kukdong Oil Chemicals |
Hankuk Steel and Kukdong Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankuk Steel and Kukdong Oil
The main advantage of trading using opposite Hankuk Steel and Kukdong Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankuk Steel position performs unexpectedly, Kukdong Oil 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 Kukdong Oil will offset losses from the drop in Kukdong Oil's long position.| Hankuk Steel vs. Wireless Power Amplifier | Hankuk Steel vs. Heungkuk Metaltech CoLtd | Hankuk Steel vs. DONGKUK TED METAL | Hankuk Steel vs. Mobile Appliance |
| Kukdong Oil vs. Samsung Publishing Co | Kukdong Oil vs. Lotte Non Life Insurance | Kukdong Oil vs. DB Insurance Co | Kukdong Oil vs. Hankuk Steel Wire |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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