Correlation Between Hankuk Steel and Korea Information
Can any of the company-specific risk be diversified away by investing in both Hankuk Steel and Korea Information 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 Korea Information 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 Korea Information Engineering, you can compare the effects of market volatilities on Hankuk Steel and Korea Information 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 Korea Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankuk Steel and Korea Information.
Diversification Opportunities for Hankuk Steel and Korea Information
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hankuk and Korea is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Hankuk Steel Wire and Korea Information Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information 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 Korea Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of Hankuk Steel i.e., Hankuk Steel and Korea Information go up and down completely randomly.
Pair Corralation between Hankuk Steel and Korea Information
Assuming the 90 days trading horizon Hankuk Steel Wire is expected to generate 0.75 times more return on investment than Korea Information. However, Hankuk Steel Wire is 1.33 times less risky than Korea Information. It trades about 0.01 of its potential returns per unit of risk. Korea Information Engineering is currently generating about -0.02 per unit of risk. If you would invest 420,130 in Hankuk Steel Wire on October 14, 2024 and sell it today you would lose (1,630) from holding Hankuk Steel Wire or give up 0.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hankuk Steel Wire vs. Korea Information Engineering
Performance |
| Timeline |
| Hankuk Steel Wire |
| Korea Information |
Hankuk Steel and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankuk Steel and Korea Information
The main advantage of trading using opposite Hankuk Steel and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankuk Steel position performs unexpectedly, Korea Information 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 Korea Information will offset losses from the drop in Korea Information's long position.| Hankuk Steel vs. Mobile Appliance | Hankuk Steel vs. ENERGYMACHINERY KOREA CoLtd | Hankuk Steel vs. GS Engineering Construction | Hankuk Steel vs. Netmarble Games Corp |
| Korea Information vs. LG Household Healthcare | Korea Information vs. J Steel Co | Korea Information vs. Osang Healthcare Co,Ltd | Korea Information vs. Hankuk Steel Wire |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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