Correlation Between Hankook Steel and Daishin Information
Can any of the company-specific risk be diversified away by investing in both Hankook Steel and Daishin Information 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 Hankook Steel and Daishin Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hankook Steel Co and Daishin Information Communications, you can compare the effects of market volatilities on Hankook Steel and Daishin Information 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 Hankook Steel with a short position of Daishin Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankook Steel and Daishin Information.
Diversification Opportunities for Hankook Steel and Daishin Information
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hankook and Daishin is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Steel Co and Daishin Information Communicat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daishin Information and Hankook 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 Hankook Steel Co are associated (or correlated) with Daishin Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daishin Information has no effect on the direction of Hankook Steel i.e., Hankook Steel and Daishin Information go up and down completely randomly.
Pair Corralation between Hankook Steel and Daishin Information
Assuming the 90 days trading horizon Hankook Steel is expected to generate 4.39 times less return on investment than Daishin Information. In addition to that, Hankook Steel is 2.26 times more volatile than Daishin Information Communications. It trades about 0.03 of its total potential returns per unit of risk. Daishin Information Communications is currently generating about 0.34 per unit of volatility. If you would invest 83,400 in Daishin Information Communications on September 13, 2024 and sell it today you would earn a total of 20,800 from holding Daishin Information Communications or generate 24.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hankook Steel Co vs. Daishin Information Communicat
Performance |
| Timeline |
| Hankook Steel |
| Daishin Information |
Hankook Steel and Daishin Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankook Steel and Daishin Information
The main advantage of trading using opposite Hankook Steel and Daishin Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankook Steel position performs unexpectedly, Daishin Information 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 Daishin Information will offset losses from the drop in Daishin Information's long position.| Hankook Steel vs. Display Tech Co | Hankook Steel vs. Ssangyong Information Communication | Hankook Steel vs. Korea Computer | Hankook Steel vs. Digital Power Communications |
| Daishin Information vs. Settlebank | Daishin Information vs. Solution Advanced Technology | Daishin Information vs. Busan Industrial Co | Daishin Information vs. Busan Ind |
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 CEOs Directory module to screen CEOs from public companies around the world.
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