Correlation Between Hankook Steel and TK Chemical
Can any of the company-specific risk be diversified away by investing in both Hankook Steel and TK Chemical 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 TK Chemical 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 TK Chemical, you can compare the effects of market volatilities on Hankook Steel and TK Chemical 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 TK Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankook Steel and TK Chemical.
Diversification Opportunities for Hankook Steel and TK Chemical
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hankook and 104480 is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Steel Co and TK Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TK Chemical 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 TK Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TK Chemical has no effect on the direction of Hankook Steel i.e., Hankook Steel and TK Chemical go up and down completely randomly.
Pair Corralation between Hankook Steel and TK Chemical
Assuming the 90 days trading horizon Hankook Steel Co is expected to generate 1.15 times more return on investment than TK Chemical. However, Hankook Steel is 1.15 times more volatile than TK Chemical. It trades about -0.02 of its potential returns per unit of risk. TK Chemical is currently generating about -0.04 per unit of risk. If you would invest 337,000 in Hankook Steel Co on October 18, 2024 and sell it today you would lose (148,500) from holding Hankook Steel Co or give up 44.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Hankook Steel Co vs. TK Chemical
Performance |
| Timeline |
| Hankook Steel |
| TK Chemical |
Hankook Steel and TK Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankook Steel and TK Chemical
The main advantage of trading using opposite Hankook Steel and TK Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankook Steel position performs unexpectedly, TK Chemical 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 TK Chemical will offset losses from the drop in TK Chemical's long position.| Hankook Steel vs. AptaBio Therapeutics | Hankook Steel vs. Daewoo SBI SPAC | Hankook Steel vs. Dream Security co | Hankook Steel vs. Microfriend |
| TK Chemical vs. Hankook Steel Co | TK Chemical vs. Insun Environment New | TK Chemical vs. Samhyun Steel Co | TK Chemical vs. Jinro Distillers 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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