Correlation Between Hankuk Steel and Hanjoo Light
Can any of the company-specific risk be diversified away by investing in both Hankuk Steel and Hanjoo Light 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 Hanjoo Light 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 Hanjoo Light Metal, you can compare the effects of market volatilities on Hankuk Steel and Hanjoo Light 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 Hanjoo Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankuk Steel and Hanjoo Light.
Diversification Opportunities for Hankuk Steel and Hanjoo Light
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hankuk and Hanjoo is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hankuk Steel Wire and Hanjoo Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjoo Light Metal 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 Hanjoo Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanjoo Light Metal has no effect on the direction of Hankuk Steel i.e., Hankuk Steel and Hanjoo Light go up and down completely randomly.
Pair Corralation between Hankuk Steel and Hanjoo Light
Assuming the 90 days trading horizon Hankuk Steel Wire is expected to generate 0.83 times more return on investment than Hanjoo Light. However, Hankuk Steel Wire is 1.21 times less risky than Hanjoo Light. It trades about 0.03 of its potential returns per unit of risk. Hanjoo Light Metal is currently generating about -0.36 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. Hanjoo Light Metal
Performance |
| Timeline |
| Hankuk Steel Wire |
| Hanjoo Light Metal |
Hankuk Steel and Hanjoo Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankuk Steel and Hanjoo Light
The main advantage of trading using opposite Hankuk Steel and Hanjoo Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankuk Steel position performs unexpectedly, Hanjoo Light 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 Hanjoo Light will offset losses from the drop in Hanjoo Light'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 |
| Hanjoo Light vs. Samsung Electronics Co | Hanjoo Light vs. Samsung Electronics Co | Hanjoo Light vs. LG Energy Solution | Hanjoo Light vs. SK Hynix |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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