Correlation Between Korea Ratings and Histeel
Can any of the company-specific risk be diversified away by investing in both Korea Ratings and Histeel 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 Korea Ratings and Histeel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Ratings Co and Histeel, you can compare the effects of market volatilities on Korea Ratings and Histeel 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 Korea Ratings with a short position of Histeel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Ratings and Histeel.
Diversification Opportunities for Korea Ratings and Histeel
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Korea and Histeel is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Korea Ratings Co and Histeel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Histeel and Korea Ratings 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 Korea Ratings Co are associated (or correlated) with Histeel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Histeel has no effect on the direction of Korea Ratings i.e., Korea Ratings and Histeel go up and down completely randomly.
Pair Corralation between Korea Ratings and Histeel
Assuming the 90 days trading horizon Korea Ratings Co is expected to generate 0.16 times more return on investment than Histeel. However, Korea Ratings Co is 6.06 times less risky than Histeel. It trades about 0.22 of its potential returns per unit of risk. Histeel is currently generating about -0.02 per unit of risk. If you would invest 8,520,000 in Korea Ratings Co on September 3, 2024 and sell it today you would earn a total of 280,000 from holding Korea Ratings Co or generate 3.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Ratings Co vs. Histeel
Performance |
| Timeline |
| Korea Ratings |
| Histeel |
Korea Ratings and Histeel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Ratings and Histeel
The main advantage of trading using opposite Korea Ratings and Histeel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Ratings position performs unexpectedly, Histeel 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 Histeel will offset losses from the drop in Histeel's long position.| Korea Ratings vs. Ilji Technology Co | Korea Ratings vs. LG Electronics Pfd | Korea Ratings vs. Korean Air Lines | Korea Ratings vs. KyungIn Electronics Co |
| Histeel vs. LG Chemicals | Histeel vs. POSCO Holdings | Histeel vs. Hanwha Solutions | Histeel vs. Lotte Chemical 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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