Correlation Between Hwangkum Steel and Foodnamoo
Can any of the company-specific risk be diversified away by investing in both Hwangkum 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 Hwangkum Steel and Foodnamoo 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 Foodnamoo, you can compare the effects of market volatilities on Hwangkum 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 Hwangkum Steel with a short position of Foodnamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwangkum Steel and Foodnamoo.
Diversification Opportunities for Hwangkum Steel and Foodnamoo
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hwangkum and Foodnamoo is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hwangkum Steel Technology and Foodnamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foodnamoo 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 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 Hwangkum Steel i.e., Hwangkum Steel and Foodnamoo go up and down completely randomly.
Pair Corralation between Hwangkum Steel and Foodnamoo
Assuming the 90 days trading horizon Hwangkum Steel Technology is expected to generate 0.55 times more return on investment than Foodnamoo. However, Hwangkum Steel Technology is 1.82 times less risky than Foodnamoo. It trades about -0.02 of its potential returns per unit of risk. Foodnamoo is currently generating about -0.2 per unit of risk. If you would invest 500,220 in Hwangkum Steel Technology on October 30, 2024 and sell it today you would lose (6,220) from holding Hwangkum Steel Technology or give up 1.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hwangkum Steel Technology vs. Foodnamoo
Performance |
| Timeline |
| Hwangkum Steel Technology |
| Foodnamoo |
Hwangkum Steel and Foodnamoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hwangkum Steel and Foodnamoo
The main advantage of trading using opposite Hwangkum Steel and Foodnamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hwangkum 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.| Hwangkum Steel vs. Daejoo Electronic Materials | Hwangkum Steel vs. Nable Communications | Hwangkum Steel vs. Ecoplastic | Hwangkum Steel vs. Hyosung Advanced Materials |
| Foodnamoo vs. Ssangyong Information Communication | Foodnamoo vs. Sewoon Medical Co | Foodnamoo vs. Nable Communications | Foodnamoo vs. Sejong Telecom |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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