Correlation Between Hankuk Steel and Choil Aluminum
Can any of the company-specific risk be diversified away by investing in both Hankuk Steel and Choil Aluminum 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 Choil Aluminum 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 Choil Aluminum, you can compare the effects of market volatilities on Hankuk Steel and Choil Aluminum 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 Choil Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankuk Steel and Choil Aluminum.
Diversification Opportunities for Hankuk Steel and Choil Aluminum
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hankuk and Choil is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hankuk Steel Wire and Choil Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choil Aluminum 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 Choil Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choil Aluminum has no effect on the direction of Hankuk Steel i.e., Hankuk Steel and Choil Aluminum go up and down completely randomly.
Pair Corralation between Hankuk Steel and Choil Aluminum
Assuming the 90 days trading horizon Hankuk Steel Wire is expected to generate 0.71 times more return on investment than Choil Aluminum. However, Hankuk Steel Wire is 1.41 times less risky than Choil Aluminum. It trades about 0.16 of its potential returns per unit of risk. Choil Aluminum is currently generating about -0.14 per unit of risk. If you would invest 281,000 in Hankuk Steel Wire on August 28, 2024 and sell it today you would earn a total of 16,000 from holding Hankuk Steel Wire or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hankuk Steel Wire vs. Choil Aluminum
Performance |
| Timeline |
| Hankuk Steel Wire |
| Choil Aluminum |
Hankuk Steel and Choil Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankuk Steel and Choil Aluminum
The main advantage of trading using opposite Hankuk Steel and Choil Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankuk Steel position performs unexpectedly, Choil Aluminum 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 Choil Aluminum will offset losses from the drop in Choil Aluminum's long position.| Hankuk Steel vs. Coloray International Investment | Hankuk Steel vs. Chorokbaem Healthcare Co | Hankuk Steel vs. Sewoon Medical Co | Hankuk Steel vs. LG Household Healthcare |
| Choil Aluminum vs. Hankuk Steel Wire | Choil Aluminum vs. Cuckoo Homesys Co | Choil Aluminum vs. Kukdong Oil Chemicals | Choil Aluminum vs. Hanil Iron 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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