Correlation Between Hankook Steel and ChipsMedia
Can any of the company-specific risk be diversified away by investing in both Hankook Steel and ChipsMedia 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 ChipsMedia 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 ChipsMedia, you can compare the effects of market volatilities on Hankook Steel and ChipsMedia 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 ChipsMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankook Steel and ChipsMedia.
Diversification Opportunities for Hankook Steel and ChipsMedia
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hankook and ChipsMedia is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Steel Co and ChipsMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChipsMedia 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 ChipsMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChipsMedia has no effect on the direction of Hankook Steel i.e., Hankook Steel and ChipsMedia go up and down completely randomly.
Pair Corralation between Hankook Steel and ChipsMedia
Assuming the 90 days trading horizon Hankook Steel Co is expected to generate 1.68 times more return on investment than ChipsMedia. However, Hankook Steel is 1.68 times more volatile than ChipsMedia. It trades about 0.03 of its potential returns per unit of risk. ChipsMedia is currently generating about 0.01 per unit of risk. If you would invest 188,800 in Hankook Steel Co on September 13, 2024 and sell it today you would lose (1,800) from holding Hankook Steel Co or give up 0.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hankook Steel Co vs. ChipsMedia
Performance |
| Timeline |
| Hankook Steel |
| ChipsMedia |
Hankook Steel and ChipsMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankook Steel and ChipsMedia
The main advantage of trading using opposite Hankook Steel and ChipsMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankook Steel position performs unexpectedly, ChipsMedia 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 ChipsMedia will offset losses from the drop in ChipsMedia'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 |
| ChipsMedia vs. Lake Materials Co | ChipsMedia vs. Union Materials Corp | ChipsMedia vs. Ecoplastic | ChipsMedia vs. EV Advanced Material |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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