Correlation Between Hwangkum Steel and Sejong Industrial
Can any of the company-specific risk be diversified away by investing in both Hwangkum Steel and Sejong Industrial 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 Hwangkum Steel and Sejong Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hwangkum Steel Technology and Sejong Industrial, you can compare the effects of market volatilities on Hwangkum Steel and Sejong Industrial 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 Hwangkum Steel with a short position of Sejong Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwangkum Steel and Sejong Industrial.
Diversification Opportunities for Hwangkum Steel and Sejong Industrial
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hwangkum and Sejong is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Hwangkum Steel Technology and Sejong Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sejong Industrial and Hwangkum 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 Hwangkum Steel Technology are associated (or correlated) with Sejong Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sejong Industrial has no effect on the direction of Hwangkum Steel i.e., Hwangkum Steel and Sejong Industrial go up and down completely randomly.
Pair Corralation between Hwangkum Steel and Sejong Industrial
Assuming the 90 days trading horizon Hwangkum Steel Technology is expected to generate 0.67 times more return on investment than Sejong Industrial. However, Hwangkum Steel Technology is 1.5 times less risky than Sejong Industrial. It trades about -0.15 of its potential returns per unit of risk. Sejong Industrial is currently generating about -0.12 per unit of risk. If you would invest 671,000 in Hwangkum Steel Technology on September 4, 2024 and sell it today you would lose (165,000) from holding Hwangkum Steel Technology or give up 24.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hwangkum Steel Technology vs. Sejong Industrial
Performance |
| Timeline |
| Hwangkum Steel Technology |
| Sejong Industrial |
Hwangkum Steel and Sejong Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hwangkum Steel and Sejong Industrial
The main advantage of trading using opposite Hwangkum Steel and Sejong Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hwangkum Steel position performs unexpectedly, Sejong Industrial 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 Sejong Industrial will offset losses from the drop in Sejong Industrial's long position.| Hwangkum Steel vs. Duksan Hi Metal | Hwangkum Steel vs. Daejung Chemicals Metals | Hwangkum Steel vs. Taeyang Metal Industrial | Hwangkum Steel vs. Top Material Co |
| Sejong Industrial vs. KMH Hitech Co | Sejong Industrial vs. Raontech | Sejong Industrial vs. Hwangkum Steel Technology | Sejong Industrial vs. CU Tech Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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