Correlation Between Hankuk Steel and Automobile
Can any of the company-specific risk be diversified away by investing in both Hankuk Steel and Automobile 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 Automobile 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 Automobile Pc, you can compare the effects of market volatilities on Hankuk Steel and Automobile 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 Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankuk Steel and Automobile.
Diversification Opportunities for Hankuk Steel and Automobile
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hankuk and Automobile is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hankuk Steel Wire and Automobile Pc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automobile Pc 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 Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automobile Pc has no effect on the direction of Hankuk Steel i.e., Hankuk Steel and Automobile go up and down completely randomly.
Pair Corralation between Hankuk Steel and Automobile
Assuming the 90 days trading horizon Hankuk Steel Wire is expected to generate 0.59 times more return on investment than Automobile. However, Hankuk Steel Wire is 1.7 times less risky than Automobile. It trades about 0.0 of its potential returns per unit of risk. Automobile Pc is currently generating about -0.08 per unit of risk. If you would invest 393,354 in Hankuk Steel Wire on September 12, 2024 and sell it today you would lose (13,354) from holding Hankuk Steel Wire or give up 3.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hankuk Steel Wire vs. Automobile Pc
Performance |
| Timeline |
| Hankuk Steel Wire |
| Automobile Pc |
Hankuk Steel and Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankuk Steel and Automobile
The main advantage of trading using opposite Hankuk Steel and Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankuk Steel position performs unexpectedly, Automobile 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 Automobile will offset losses from the drop in Automobile's long position.| Hankuk Steel vs. LG Chemicals | Hankuk Steel vs. POSCO Holdings | Hankuk Steel vs. Hanwha Solutions | Hankuk Steel vs. Lotte Chemical Corp |
| Automobile vs. Daou Data Corp | Automobile vs. Solution Advanced Technology | Automobile vs. Busan Industrial Co | Automobile vs. Busan Ind |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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