Correlation Between Daewon Media and Hankuk Steel
Can any of the company-specific risk be diversified away by investing in both Daewon Media and Hankuk Steel 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 Daewon Media and Hankuk Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewon Media Co and Hankuk Steel Wire, you can compare the effects of market volatilities on Daewon Media and Hankuk Steel 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 Daewon Media with a short position of Hankuk Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewon Media and Hankuk Steel.
Diversification Opportunities for Daewon Media and Hankuk Steel
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daewon and Hankuk is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Daewon Media Co and Hankuk Steel Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankuk Steel Wire and Daewon Media 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 Daewon Media Co are associated (or correlated) with Hankuk Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankuk Steel Wire has no effect on the direction of Daewon Media i.e., Daewon Media and Hankuk Steel go up and down completely randomly.
Pair Corralation between Daewon Media and Hankuk Steel
Assuming the 90 days trading horizon Daewon Media Co is expected to under-perform the Hankuk Steel. But the stock apears to be less risky and, when comparing its historical volatility, Daewon Media Co is 1.37 times less risky than Hankuk Steel. The stock trades about -0.2 of its potential returns per unit of risk. The Hankuk Steel Wire is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 281,000 in Hankuk Steel Wire on August 28, 2024 and sell it today you would earn a total of 19,000 from holding Hankuk Steel Wire or generate 6.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewon Media Co vs. Hankuk Steel Wire
Performance |
| Timeline |
| Daewon Media |
| Hankuk Steel Wire |
Daewon Media and Hankuk Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewon Media and Hankuk Steel
The main advantage of trading using opposite Daewon Media and Hankuk Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewon Media position performs unexpectedly, Hankuk Steel 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 Hankuk Steel will offset losses from the drop in Hankuk Steel's long position.| Daewon Media vs. HJ ShipBuilding Construction | Daewon Media vs. Golden Bridge Investment | Daewon Media vs. Daewoo Engineering Construction | Daewon Media vs. Korea Investment Holdings |
| Hankuk Steel vs. LG Chemicals | Hankuk Steel vs. Lotte Chemical Corp | Hankuk Steel vs. Hyundai Steel | Hankuk Steel vs. Seah Steel 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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