Correlation Between Hwangkum Steel and Daejung Chemicals
Can any of the company-specific risk be diversified away by investing in both Hwangkum Steel and Daejung Chemicals 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 Daejung Chemicals 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 Daejung Chemicals Metals, you can compare the effects of market volatilities on Hwangkum Steel and Daejung Chemicals 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 Daejung Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwangkum Steel and Daejung Chemicals.
Diversification Opportunities for Hwangkum Steel and Daejung Chemicals
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hwangkum and Daejung is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hwangkum Steel Technology and Daejung Chemicals Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejung Chemicals Metals 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 Daejung Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejung Chemicals Metals has no effect on the direction of Hwangkum Steel i.e., Hwangkum Steel and Daejung Chemicals go up and down completely randomly.
Pair Corralation between Hwangkum Steel and Daejung Chemicals
Assuming the 90 days trading horizon Hwangkum Steel Technology is expected to under-perform the Daejung Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, Hwangkum Steel Technology is 1.39 times less risky than Daejung Chemicals. The stock trades about -0.02 of its potential returns per unit of risk. The Daejung Chemicals Metals is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,217,815 in Daejung Chemicals Metals on October 30, 2024 and sell it today you would earn a total of 102,185 from holding Daejung Chemicals Metals or generate 8.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hwangkum Steel Technology vs. Daejung Chemicals Metals
Performance |
| Timeline |
| Hwangkum Steel Technology |
| Daejung Chemicals Metals |
Hwangkum Steel and Daejung Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hwangkum Steel and Daejung Chemicals
The main advantage of trading using opposite Hwangkum Steel and Daejung Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hwangkum Steel position performs unexpectedly, Daejung Chemicals 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 Daejung Chemicals will offset losses from the drop in Daejung Chemicals' long position.| Hwangkum Steel vs. Daejoo Electronic Materials | Hwangkum Steel vs. Nable Communications | Hwangkum Steel vs. Ecoplastic | Hwangkum Steel vs. Hyosung Advanced Materials |
| Daejung Chemicals vs. Dongwoo Farm To | Daejung Chemicals vs. Lotte Chilsung Beverage | Daejung Chemicals vs. Nam Hwa Construction | Daejung Chemicals vs. Pyung Hwa Industrial |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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