Correlation Between Hankuk Steel and Lotte Data
Can any of the company-specific risk be diversified away by investing in both Hankuk Steel and Lotte Data 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 Lotte Data 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 Lotte Data Communication, you can compare the effects of market volatilities on Hankuk Steel and Lotte Data 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 Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankuk Steel and Lotte Data.
Diversification Opportunities for Hankuk Steel and Lotte Data
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hankuk and Lotte is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Hankuk Steel Wire and Lotte Data Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Data Communication 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 Lotte Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Data Communication has no effect on the direction of Hankuk Steel i.e., Hankuk Steel and Lotte Data go up and down completely randomly.
Pair Corralation between Hankuk Steel and Lotte Data
Assuming the 90 days trading horizon Hankuk Steel Wire is expected to generate 2.48 times more return on investment than Lotte Data. However, Hankuk Steel is 2.48 times more volatile than Lotte Data Communication. It trades about 0.18 of its potential returns per unit of risk. Lotte Data Communication is currently generating about 0.01 per unit of risk. If you would invest 290,000 in Hankuk Steel Wire on October 30, 2024 and sell it today you would earn a total of 125,000 from holding Hankuk Steel Wire or generate 43.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hankuk Steel Wire vs. Lotte Data Communication
Performance |
| Timeline |
| Hankuk Steel Wire |
| Lotte Data Communication |
Hankuk Steel and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankuk Steel and Lotte Data
The main advantage of trading using opposite Hankuk Steel and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankuk Steel position performs unexpectedly, Lotte Data 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 Lotte Data will offset losses from the drop in Lotte Data's long position.| Hankuk Steel vs. Husteel | Hankuk Steel vs. Ssangyong Information Communication | Hankuk Steel vs. Insun Environment New | Hankuk Steel vs. Nice Information Telecommunication |
| Lotte Data vs. Daiyang Metal Co | Lotte Data vs. CKH Food Health | Lotte Data vs. Seoyon Topmetal Co | Lotte Data vs. Korea Industrial Co |
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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