Correlation Between Union Materials and Histeel
Can any of the company-specific risk be diversified away by investing in both Union Materials 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 Union Materials and Histeel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Materials Corp and Histeel, you can compare the effects of market volatilities on Union Materials 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 Union Materials with a short position of Histeel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Materials and Histeel.
Diversification Opportunities for Union Materials and Histeel
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Union and Histeel is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Union Materials Corp and Histeel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Histeel and Union Materials 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 Union Materials Corp 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 Union Materials i.e., Union Materials and Histeel go up and down completely randomly.
Pair Corralation between Union Materials and Histeel
Assuming the 90 days trading horizon Union Materials Corp is expected to generate 1.11 times more return on investment than Histeel. However, Union Materials is 1.11 times more volatile than Histeel. It trades about 0.01 of its potential returns per unit of risk. Histeel is currently generating about 0.0 per unit of risk. If you would invest 284,970 in Union Materials Corp on September 5, 2024 and sell it today you would lose (51,470) from holding Union Materials Corp or give up 18.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Materials Corp vs. Histeel
Performance |
| Timeline |
| Union Materials Corp |
| Histeel |
Union Materials and Histeel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Materials and Histeel
The main advantage of trading using opposite Union Materials and Histeel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Materials 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.| Union Materials vs. Jeil Steel Mfg | Union Materials vs. Daehan Steel | Union Materials vs. Wireless Power Amplifier | Union Materials vs. Daishin Information Communications |
| Histeel vs. LG Chemicals | Histeel vs. POSCO Holdings | Histeel vs. Lotte Chemical Corp | Histeel vs. Hyundai Steel |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |