Correlation Between Han Kook and Korea Steel
Can any of the company-specific risk be diversified away by investing in both Han Kook and Korea Steel 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 Han Kook and Korea Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Han Kook Steel and Korea Steel Co, you can compare the effects of market volatilities on Han Kook and Korea Steel 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 Han Kook with a short position of Korea Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Han Kook and Korea Steel.
Diversification Opportunities for Han Kook and Korea Steel
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Han and Korea is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Han Kook Steel and Korea Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Steel and Han Kook 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 Han Kook Steel are associated (or correlated) with Korea Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Steel has no effect on the direction of Han Kook i.e., Han Kook and Korea Steel go up and down completely randomly.
Pair Corralation between Han Kook and Korea Steel
Assuming the 90 days trading horizon Han Kook Steel is expected to under-perform the Korea Steel. In addition to that, Han Kook is 2.07 times more volatile than Korea Steel Co. It trades about -0.03 of its total potential returns per unit of risk. Korea Steel Co is currently generating about -0.02 per unit of volatility. If you would invest 202,000 in Korea Steel Co on November 27, 2024 and sell it today you would lose (36,500) from holding Korea Steel Co or give up 18.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Han Kook Steel vs. Korea Steel Co
Performance |
| Timeline |
| Han Kook Steel |
| Korea Steel |
Han Kook and Korea Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Han Kook and Korea Steel
The main advantage of trading using opposite Han Kook and Korea Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Han Kook position performs unexpectedly, Korea Steel 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 Steel will offset losses from the drop in Korea Steel's long position.| Han Kook vs. Kolon Plastics | Han Kook vs. BGF Retail Co | Han Kook vs. Solus Advanced Materials | Han Kook vs. Union Materials Corp |
| Korea Steel vs. Playgram Co | Korea Steel vs. Daishin Information Communications | Korea Steel vs. Neungyule Education | Korea Steel vs. Sangsin Energy Display |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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