Correlation Between Hankook Steel and KG Eco
Can any of the company-specific risk be diversified away by investing in both Hankook Steel and KG Eco 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 KG Eco 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 KG Eco Technology, you can compare the effects of market volatilities on Hankook Steel and KG Eco 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 KG Eco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankook Steel and KG Eco.
Diversification Opportunities for Hankook Steel and KG Eco
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hankook and 151860 is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Steel Co and KG Eco Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KG Eco Technology 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 KG Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KG Eco Technology has no effect on the direction of Hankook Steel i.e., Hankook Steel and KG Eco go up and down completely randomly.
Pair Corralation between Hankook Steel and KG Eco
Assuming the 90 days trading horizon Hankook Steel Co is expected to generate 0.85 times more return on investment than KG Eco. However, Hankook Steel Co is 1.18 times less risky than KG Eco. It trades about -0.03 of its potential returns per unit of risk. KG Eco Technology is currently generating about -0.02 per unit of risk. If you would invest 357,500 in Hankook Steel Co on October 16, 2024 and sell it today you would lose (168,400) from holding Hankook Steel Co or give up 47.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Hankook Steel Co vs. KG Eco Technology
Performance |
| Timeline |
| Hankook Steel |
| KG Eco Technology |
Hankook Steel and KG Eco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankook Steel and KG Eco
The main advantage of trading using opposite Hankook Steel and KG Eco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankook Steel position performs unexpectedly, KG Eco 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 KG Eco will offset losses from the drop in KG Eco's long position.| Hankook Steel vs. Duksan Hi Metal | Hankook Steel vs. Youngsin Metal Industrial | Hankook Steel vs. Iljin Display | Hankook Steel vs. Heungkuk Metaltech CoLtd |
| KG Eco vs. Shinil Industrial Co | KG Eco vs. Hankook Steel Co | KG Eco vs. Daesung Industrial Co | KG Eco vs. Nature and Environment |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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