Correlation Between Hankook Steel and HansBiomed
Can any of the company-specific risk be diversified away by investing in both Hankook Steel and HansBiomed 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 HansBiomed 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 HansBiomed, you can compare the effects of market volatilities on Hankook Steel and HansBiomed 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 HansBiomed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankook Steel and HansBiomed.
Diversification Opportunities for Hankook Steel and HansBiomed
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hankook and HansBiomed is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Steel Co and HansBiomed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HansBiomed 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 HansBiomed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HansBiomed has no effect on the direction of Hankook Steel i.e., Hankook Steel and HansBiomed go up and down completely randomly.
Pair Corralation between Hankook Steel and HansBiomed
Assuming the 90 days trading horizon Hankook Steel Co is expected to generate 1.6 times more return on investment than HansBiomed. However, Hankook Steel is 1.6 times more volatile than HansBiomed. It trades about 0.05 of its potential returns per unit of risk. HansBiomed is currently generating about -0.16 per unit of risk. If you would invest 197,100 in Hankook Steel Co on September 2, 2024 and sell it today you would earn a total of 18,400 from holding Hankook Steel Co or generate 9.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hankook Steel Co vs. HansBiomed
Performance |
| Timeline |
| Hankook Steel |
| HansBiomed |
Hankook Steel and HansBiomed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankook Steel and HansBiomed
The main advantage of trading using opposite Hankook Steel and HansBiomed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankook Steel position performs unexpectedly, HansBiomed 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 HansBiomed will offset losses from the drop in HansBiomed's long position.| Hankook Steel vs. AptaBio Therapeutics | Hankook Steel vs. Daewoo SBI SPAC | Hankook Steel vs. Dream Security co | Hankook Steel vs. Microfriend |
| HansBiomed vs. AptaBio Therapeutics | HansBiomed vs. KT Hitel | HansBiomed vs. SillaJen | HansBiomed vs. Cytogen |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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