Correlation Between Hankuk Steel and Han Kook
Can any of the company-specific risk be diversified away by investing in both Hankuk Steel and Han Kook 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 Han Kook 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 Han Kook Steel, you can compare the effects of market volatilities on Hankuk Steel and Han Kook 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 Han Kook. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankuk Steel and Han Kook.
Diversification Opportunities for Hankuk Steel and Han Kook
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hankuk and Han is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hankuk Steel Wire and Han Kook Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Han Kook 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 Han Kook. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Han Kook Steel has no effect on the direction of Hankuk Steel i.e., Hankuk Steel and Han Kook go up and down completely randomly.
Pair Corralation between Hankuk Steel and Han Kook
Assuming the 90 days trading horizon Hankuk Steel Wire is expected to generate 0.45 times more return on investment than Han Kook. However, Hankuk Steel Wire is 2.24 times less risky than Han Kook. It trades about -0.06 of its potential returns per unit of risk. Han Kook Steel is currently generating about -0.03 per unit of risk. If you would invest 370,960 in Hankuk Steel Wire on September 2, 2024 and sell it today you would lose (80,960) from holding Hankuk Steel Wire or give up 21.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hankuk Steel Wire vs. Han Kook Steel
Performance |
| Timeline |
| Hankuk Steel Wire |
| Han Kook Steel |
Hankuk Steel and Han Kook Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankuk Steel and Han Kook
The main advantage of trading using opposite Hankuk Steel and Han Kook positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankuk Steel position performs unexpectedly, Han Kook 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 Han Kook will offset losses from the drop in Han Kook's long position.| Hankuk Steel vs. LG Chemicals | Hankuk Steel vs. POSCO Holdings | Hankuk Steel vs. Hanwha Solutions | Hankuk 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 Stocks Directory module to find actively traded stocks across global markets.
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