Correlation Between Hankuk Steel and Stic Investments
Can any of the company-specific risk be diversified away by investing in both Hankuk Steel and Stic Investments 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 Stic Investments 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 Stic Investments, you can compare the effects of market volatilities on Hankuk Steel and Stic Investments 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 Stic Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankuk Steel and Stic Investments.
Diversification Opportunities for Hankuk Steel and Stic Investments
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hankuk and Stic is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Hankuk Steel Wire and Stic Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stic Investments 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 Stic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stic Investments has no effect on the direction of Hankuk Steel i.e., Hankuk Steel and Stic Investments go up and down completely randomly.
Pair Corralation between Hankuk Steel and Stic Investments
Assuming the 90 days trading horizon Hankuk Steel Wire is expected to under-perform the Stic Investments. But the stock apears to be less risky and, when comparing its historical volatility, Hankuk Steel Wire is 1.62 times less risky than Stic Investments. The stock trades about -0.06 of its potential returns per unit of risk. The Stic Investments is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 674,387 in Stic Investments on August 31, 2024 and sell it today you would earn a total of 153,613 from holding Stic Investments or generate 22.78% 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. Stic Investments
Performance |
| Timeline |
| Hankuk Steel Wire |
| Stic Investments |
Hankuk Steel and Stic Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankuk Steel and Stic Investments
The main advantage of trading using opposite Hankuk Steel and Stic Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankuk Steel position performs unexpectedly, Stic Investments 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 Stic Investments will offset losses from the drop in Stic Investments' long position.| Hankuk Steel vs. LG Chemicals | Hankuk Steel vs. POSCO Holdings | Hankuk Steel vs. Hanwha Solutions | Hankuk Steel vs. Lotte Chemical Corp |
| Stic Investments vs. Dongsin Engineering Construction | Stic Investments vs. Doosan Fuel Cell | Stic Investments vs. Daishin Balance 1 | Stic Investments vs. Total Soft Bank |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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