Correlation Between Hankook Steel and Foodnamoo
Can any of the company-specific risk be diversified away by investing in both Hankook Steel and Foodnamoo 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 Foodnamoo 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 Foodnamoo, you can compare the effects of market volatilities on Hankook Steel and Foodnamoo 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 Foodnamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankook Steel and Foodnamoo.
Diversification Opportunities for Hankook Steel and Foodnamoo
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hankook and Foodnamoo is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Steel Co and Foodnamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foodnamoo 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 Foodnamoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foodnamoo has no effect on the direction of Hankook Steel i.e., Hankook Steel and Foodnamoo go up and down completely randomly.
Pair Corralation between Hankook Steel and Foodnamoo
Assuming the 90 days trading horizon Hankook Steel Co is expected to generate 0.96 times more return on investment than Foodnamoo. However, Hankook Steel Co is 1.04 times less risky than Foodnamoo. It trades about -0.01 of its potential returns per unit of risk. Foodnamoo is currently generating about -0.09 per unit of risk. If you would invest 198,300 in Hankook Steel Co on November 2, 2024 and sell it today you would lose (18,100) from holding Hankook Steel Co or give up 9.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hankook Steel Co vs. Foodnamoo
Performance |
| Timeline |
| Hankook Steel |
| Foodnamoo |
Hankook Steel and Foodnamoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hankook Steel and Foodnamoo
The main advantage of trading using opposite Hankook Steel and Foodnamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankook Steel position performs unexpectedly, Foodnamoo 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 Foodnamoo will offset losses from the drop in Foodnamoo's long position.| Hankook Steel vs. Eagon Industrial Co | Hankook Steel vs. Formetal Co | Hankook Steel vs. Nable Communications | Hankook Steel vs. Lotte Data Communication |
| Foodnamoo vs. Industrial Bank | Foodnamoo vs. Eagon Industrial Co | Foodnamoo vs. Shinil Industrial Co | Foodnamoo vs. Kbi Metal 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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