Correlation Between Hankook Steel and Dongwoo Farm
Can any of the company-specific risk be diversified away by investing in both Hankook Steel and Dongwoo Farm 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 Dongwoo Farm 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 Dongwoo Farm To, you can compare the effects of market volatilities on Hankook Steel and Dongwoo Farm 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 Dongwoo Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankook Steel and Dongwoo Farm.
Diversification Opportunities for Hankook Steel and Dongwoo Farm
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hankook and Dongwoo is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Steel Co and Dongwoo Farm To in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwoo Farm To 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 Dongwoo Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwoo Farm To has no effect on the direction of Hankook Steel i.e., Hankook Steel and Dongwoo Farm go up and down completely randomly.
Pair Corralation between Hankook Steel and Dongwoo Farm
Assuming the 90 days trading horizon Hankook Steel Co is expected to under-perform the Dongwoo Farm. In addition to that, Hankook Steel is 4.33 times more volatile than Dongwoo Farm To. It trades about -0.11 of its total potential returns per unit of risk. Dongwoo Farm To is currently generating about 0.39 per unit of volatility. If you would invest 190,012 in Dongwoo Farm To on October 14, 2024 and sell it today you would earn a total of 8,488 from holding Dongwoo Farm To or generate 4.47% 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. Dongwoo Farm To
Performance |
| Timeline |
| Hankook Steel |
| Dongwoo Farm To |
Hankook Steel and Dongwoo Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankook Steel and Dongwoo Farm
The main advantage of trading using opposite Hankook Steel and Dongwoo Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankook Steel position performs unexpectedly, Dongwoo Farm 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 Dongwoo Farm will offset losses from the drop in Dongwoo Farm's long position.| Hankook Steel vs. Ssangyong Information Communication | Hankook Steel vs. Kakao Games Corp | Hankook Steel vs. Koryo Credit Information | Hankook Steel vs. Jeong Moon Information |
| Dongwoo Farm vs. Daewoo Electronic Components | Dongwoo Farm vs. DC Media Co | Dongwoo Farm vs. Samwha Electronics Co | Dongwoo Farm vs. Wave 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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