Correlation Between Hwangkum Steel and Iljin HySolus
Can any of the company-specific risk be diversified away by investing in both Hwangkum Steel and Iljin HySolus 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 Iljin HySolus 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 Iljin HySolus Co, you can compare the effects of market volatilities on Hwangkum Steel and Iljin HySolus 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 Iljin HySolus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwangkum Steel and Iljin HySolus.
Diversification Opportunities for Hwangkum Steel and Iljin HySolus
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hwangkum and Iljin is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hwangkum Steel Technology and Iljin HySolus Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iljin HySolus 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 Iljin HySolus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iljin HySolus has no effect on the direction of Hwangkum Steel i.e., Hwangkum Steel and Iljin HySolus go up and down completely randomly.
Pair Corralation between Hwangkum Steel and Iljin HySolus
Assuming the 90 days trading horizon Hwangkum Steel Technology is expected to under-perform the Iljin HySolus. But the stock apears to be less risky and, when comparing its historical volatility, Hwangkum Steel Technology is 1.82 times less risky than Iljin HySolus. The stock trades about -0.12 of its potential returns per unit of risk. The Iljin HySolus Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 2,275,000 in Iljin HySolus Co on September 3, 2024 and sell it today you would lose (436,000) from holding Iljin HySolus Co or give up 19.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hwangkum Steel Technology vs. Iljin HySolus Co
Performance |
| Timeline |
| Hwangkum Steel Technology |
| Iljin HySolus |
Hwangkum Steel and Iljin HySolus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hwangkum Steel and Iljin HySolus
The main advantage of trading using opposite Hwangkum Steel and Iljin HySolus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hwangkum Steel position performs unexpectedly, Iljin HySolus 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 Iljin HySolus will offset losses from the drop in Iljin HySolus' 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 |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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