Correlation Between Hankuk Steel and Semyung Electric
Can any of the company-specific risk be diversified away by investing in both Hankuk Steel and Semyung Electric 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 Semyung Electric 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 Semyung Electric Machinery, you can compare the effects of market volatilities on Hankuk Steel and Semyung Electric 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 Semyung Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankuk Steel and Semyung Electric.
Diversification Opportunities for Hankuk Steel and Semyung Electric
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hankuk and Semyung is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hankuk Steel Wire and Semyung Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semyung Electric Mac 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 Semyung Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semyung Electric Mac has no effect on the direction of Hankuk Steel i.e., Hankuk Steel and Semyung Electric go up and down completely randomly.
Pair Corralation between Hankuk Steel and Semyung Electric
Assuming the 90 days trading horizon Hankuk Steel is expected to generate 4.52 times less return on investment than Semyung Electric. But when comparing it to its historical volatility, Hankuk Steel Wire is 1.81 times less risky than Semyung Electric. It trades about 0.11 of its potential returns per unit of risk. Semyung Electric Machinery is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 447,000 in Semyung Electric Machinery on October 28, 2024 and sell it today you would earn a total of 188,000 from holding Semyung Electric Machinery or generate 42.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hankuk Steel Wire vs. Semyung Electric Machinery
Performance |
| Timeline |
| Hankuk Steel Wire |
| Semyung Electric Mac |
Hankuk Steel and Semyung Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankuk Steel and Semyung Electric
The main advantage of trading using opposite Hankuk Steel and Semyung Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankuk Steel position performs unexpectedly, Semyung Electric 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 Semyung Electric will offset losses from the drop in Semyung Electric's long position.| Hankuk Steel vs. Formetal Co | Hankuk Steel vs. Namhwa Industrial Co | Hankuk Steel vs. Organic Special Pet | Hankuk Steel vs. Shinsegae Food |
| Semyung Electric vs. SEOWONINTECHCoLtd | Semyung Electric vs. Union Materials Corp | Semyung Electric vs. Vitzro Tech Co | Semyung Electric vs. INNOX Advanced Materials |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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