Correlation Between Hankuk Steel and Jeju Semiconductor
Can any of the company-specific risk be diversified away by investing in both Hankuk Steel and Jeju Semiconductor 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 Jeju Semiconductor 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 Jeju Semiconductor Corp, you can compare the effects of market volatilities on Hankuk Steel and Jeju Semiconductor 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 Jeju Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankuk Steel and Jeju Semiconductor.
Diversification Opportunities for Hankuk Steel and Jeju Semiconductor
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hankuk and Jeju is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Hankuk Steel Wire and Jeju Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Semiconductor Corp 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 Jeju Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Semiconductor Corp has no effect on the direction of Hankuk Steel i.e., Hankuk Steel and Jeju Semiconductor go up and down completely randomly.
Pair Corralation between Hankuk Steel and Jeju Semiconductor
Assuming the 90 days trading horizon Hankuk Steel Wire is expected to generate 0.7 times more return on investment than Jeju Semiconductor. However, Hankuk Steel Wire is 1.43 times less risky than Jeju Semiconductor. It trades about 0.03 of its potential returns per unit of risk. Jeju Semiconductor Corp is currently generating about -0.55 per unit of risk. If you would invest 287,000 in Hankuk Steel Wire on September 1, 2024 and sell it today you would earn a total of 3,000 from holding Hankuk Steel Wire or generate 1.05% 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. Jeju Semiconductor Corp
Performance |
| Timeline |
| Hankuk Steel Wire |
| Jeju Semiconductor Corp |
Hankuk Steel and Jeju Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankuk Steel and Jeju Semiconductor
The main advantage of trading using opposite Hankuk Steel and Jeju Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankuk Steel position performs unexpectedly, Jeju Semiconductor 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 Jeju Semiconductor will offset losses from the drop in Jeju Semiconductor's long position.| Hankuk Steel vs. TS Investment Corp | Hankuk Steel vs. Atinum Investment Co | Hankuk Steel vs. Mobile Appliance | Hankuk Steel vs. Mobileleader CoLtd |
| Jeju Semiconductor vs. Dongsin Engineering Construction | Jeju Semiconductor vs. Doosan Fuel Cell | Jeju Semiconductor vs. Daishin Balance 1 | Jeju Semiconductor 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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