Correlation Between Hwangkum Steel and Daewoo SBI
Can any of the company-specific risk be diversified away by investing in both Hwangkum Steel and Daewoo SBI 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 Daewoo SBI 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 Daewoo SBI SPAC, you can compare the effects of market volatilities on Hwangkum Steel and Daewoo SBI 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 Daewoo SBI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwangkum Steel and Daewoo SBI.
Diversification Opportunities for Hwangkum Steel and Daewoo SBI
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hwangkum and Daewoo is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Hwangkum Steel Technology and Daewoo SBI SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo SBI SPAC 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 Daewoo SBI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo SBI SPAC has no effect on the direction of Hwangkum Steel i.e., Hwangkum Steel and Daewoo SBI go up and down completely randomly.
Pair Corralation between Hwangkum Steel and Daewoo SBI
Assuming the 90 days trading horizon Hwangkum Steel Technology is expected to generate 0.83 times more return on investment than Daewoo SBI. However, Hwangkum Steel Technology is 1.2 times less risky than Daewoo SBI. It trades about -0.16 of its potential returns per unit of risk. Daewoo SBI SPAC is currently generating about -0.17 per unit of risk. If you would invest 675,000 in Hwangkum Steel Technology on September 3, 2024 and sell it today you would lose (171,000) from holding Hwangkum Steel Technology or give up 25.33% 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. Daewoo SBI SPAC
Performance |
| Timeline |
| Hwangkum Steel Technology |
| Daewoo SBI SPAC |
Hwangkum Steel and Daewoo SBI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hwangkum Steel and Daewoo SBI
The main advantage of trading using opposite Hwangkum Steel and Daewoo SBI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hwangkum Steel position performs unexpectedly, Daewoo SBI 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 Daewoo SBI will offset losses from the drop in Daewoo SBI's long position.| Hwangkum Steel vs. DB Insurance Co | Hwangkum Steel vs. Jeju Beer Co | Hwangkum Steel vs. Korean Reinsurance Co | Hwangkum Steel vs. Dongbu Insurance Co |
| Daewoo SBI vs. Daejoo Electronic Materials | Daewoo SBI vs. Mgame Corp | Daewoo SBI vs. Kakao Games Corp | Daewoo SBI vs. Iljin Materials 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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