Correlation Between Han Kook and Seah Steel
Can any of the company-specific risk be diversified away by investing in both Han Kook and Seah 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 Seah 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 Seah Steel Corp, you can compare the effects of market volatilities on Han Kook and Seah 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 Seah Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Han Kook and Seah Steel.
Diversification Opportunities for Han Kook and Seah Steel
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Han and Seah is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Han Kook Steel and Seah Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seah Steel Corp 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 Seah Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seah Steel Corp has no effect on the direction of Han Kook i.e., Han Kook and Seah Steel go up and down completely randomly.
Pair Corralation between Han Kook and Seah Steel
Assuming the 90 days trading horizon Han Kook Steel is expected to under-perform the Seah Steel. In addition to that, Han Kook is 1.67 times more volatile than Seah Steel Corp. It trades about -0.01 of its total potential returns per unit of risk. Seah Steel Corp is currently generating about -0.01 per unit of volatility. If you would invest 13,695,800 in Seah Steel Corp on August 28, 2024 and sell it today you would lose (1,855,800) from holding Seah Steel Corp or give up 13.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Han Kook Steel vs. Seah Steel Corp
Performance |
| Timeline |
| Han Kook Steel |
| Seah Steel Corp |
Han Kook and Seah Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Han Kook and Seah Steel
The main advantage of trading using opposite Han Kook and Seah Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Han Kook position performs unexpectedly, Seah 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 Seah Steel will offset losses from the drop in Seah Steel's long position.| Han Kook vs. Fine Besteel Co | Han Kook vs. Seoyon Topmetal Co | Han Kook vs. Daiyang Metal Co | Han Kook vs. Pureun Mutual Savings |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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