Correlation Between Hankuk Steel and Dongbu Steel
Can any of the company-specific risk be diversified away by investing in both Hankuk Steel and Dongbu 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 Hankuk Steel and Dongbu Steel 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 Dongbu Steel Co, you can compare the effects of market volatilities on Hankuk Steel and Dongbu 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 Hankuk Steel with a short position of Dongbu Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankuk Steel and Dongbu Steel.
Diversification Opportunities for Hankuk Steel and Dongbu Steel
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hankuk and Dongbu is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hankuk Steel Wire and Dongbu Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbu Steel 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 Dongbu Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbu Steel has no effect on the direction of Hankuk Steel i.e., Hankuk Steel and Dongbu Steel go up and down completely randomly.
Pair Corralation between Hankuk Steel and Dongbu Steel
Assuming the 90 days trading horizon Hankuk Steel Wire is expected to generate 0.76 times more return on investment than Dongbu Steel. However, Hankuk Steel Wire is 1.31 times less risky than Dongbu Steel. It trades about 0.03 of its potential returns per unit of risk. Dongbu Steel Co is currently generating about -0.03 per unit of risk. If you would invest 287,000 in Hankuk Steel Wire on September 2, 2024 and sell it today you would earn a total of 3,000 from holding Hankuk Steel Wire or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hankuk Steel Wire vs. Dongbu Steel Co
Performance |
| Timeline |
| Hankuk Steel Wire |
| Dongbu Steel |
Hankuk Steel and Dongbu Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankuk Steel and Dongbu Steel
The main advantage of trading using opposite Hankuk Steel and Dongbu Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankuk Steel position performs unexpectedly, Dongbu 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 Dongbu Steel will offset losses from the drop in Dongbu Steel's long position.| Hankuk Steel vs. LG Chemicals | Hankuk Steel vs. POSCO Holdings | Hankuk Steel vs. Hanwha Solutions | Hankuk Steel vs. Hyundai Steel |
| Dongbu Steel vs. LG Chemicals | Dongbu Steel vs. POSCO Holdings | Dongbu Steel vs. Hanwha Solutions | Dongbu Steel vs. Hyundai Steel |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |