Correlation Between Han Kook and Moonbae Steel
Can any of the company-specific risk be diversified away by investing in both Han Kook and Moonbae 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 Moonbae 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 Moonbae Steel, you can compare the effects of market volatilities on Han Kook and Moonbae 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 Moonbae Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Han Kook and Moonbae Steel.
Diversification Opportunities for Han Kook and Moonbae Steel
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Han and Moonbae is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Han Kook Steel and Moonbae Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moonbae 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 Moonbae Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moonbae Steel has no effect on the direction of Han Kook i.e., Han Kook and Moonbae Steel go up and down completely randomly.
Pair Corralation between Han Kook and Moonbae Steel
Assuming the 90 days trading horizon Han Kook Steel is expected to under-perform the Moonbae Steel. But the stock apears to be less risky and, when comparing its historical volatility, Han Kook Steel is 1.8 times less risky than Moonbae Steel. The stock trades about -0.01 of its potential returns per unit of risk. The Moonbae Steel is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 219,500 in Moonbae Steel on December 4, 2024 and sell it today you would earn a total of 29,500 from holding Moonbae Steel or generate 13.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Han Kook Steel vs. Moonbae Steel
Performance |
| Timeline |
| Han Kook Steel |
| Moonbae Steel |
Han Kook and Moonbae Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Han Kook and Moonbae Steel
The main advantage of trading using opposite Han Kook and Moonbae Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Han Kook position performs unexpectedly, Moonbae 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 Moonbae Steel will offset losses from the drop in Moonbae Steel's long position.| Han Kook vs. EBEST Investment Securities | Han Kook vs. Grand Korea Leisure | Han Kook vs. Automobile Pc | Han Kook vs. Playgram Co |
| Moonbae Steel vs. InnoTherapy | Moonbae Steel vs. Wave Electronics Co | Moonbae Steel vs. Sungmoon Electronics Co | Moonbae Steel vs. Daejoo Electronic Materials |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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