Correlation Between Han Kook and Jeil Steel
Can any of the company-specific risk be diversified away by investing in both Han Kook and Jeil 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 Jeil 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 Jeil Steel Mfg, you can compare the effects of market volatilities on Han Kook and Jeil 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 Jeil Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Han Kook and Jeil Steel.
Diversification Opportunities for Han Kook and Jeil Steel
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Han and Jeil is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Han Kook Steel and Jeil Steel Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeil Steel Mfg 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 Jeil Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeil Steel Mfg has no effect on the direction of Han Kook i.e., Han Kook and Jeil Steel go up and down completely randomly.
Pair Corralation between Han Kook and Jeil Steel
Assuming the 90 days trading horizon Han Kook Steel is expected to generate 0.85 times more return on investment than Jeil Steel. However, Han Kook Steel is 1.17 times less risky than Jeil Steel. It trades about -0.24 of its potential returns per unit of risk. Jeil Steel Mfg is currently generating about -0.36 per unit of risk. If you would invest 188,700 in Han Kook Steel on November 3, 2024 and sell it today you would lose (11,100) from holding Han Kook Steel or give up 5.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Han Kook Steel vs. Jeil Steel Mfg
Performance |
| Timeline |
| Han Kook Steel |
| Jeil Steel Mfg |
Han Kook and Jeil Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Han Kook and Jeil Steel
The main advantage of trading using opposite Han Kook and Jeil Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Han Kook position performs unexpectedly, Jeil 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 Jeil Steel will offset losses from the drop in Jeil Steel's long position.| Han Kook vs. E Investment Development | Han Kook vs. Daol Investment Securities | Han Kook vs. Atinum Investment Co | Han Kook vs. KTB Investment Securities |
| Jeil Steel vs. Samji Electronics Co | Jeil Steel vs. LEENO Industrial | Jeil Steel vs. Samyoung Electronics Co | Jeil Steel vs. Jahwa Electronics 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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