Correlation Between System and Hankook Steel
Can any of the company-specific risk be diversified away by investing in both System and Hankook 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 System and Hankook Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between System and Application and Hankook Steel Co, you can compare the effects of market volatilities on System and Hankook 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 System with a short position of Hankook Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of System and Hankook Steel.
Diversification Opportunities for System and Hankook Steel
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between System and Hankook is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding System and Application and Hankook Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankook Steel and System 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 System and Application are associated (or correlated) with Hankook Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankook Steel has no effect on the direction of System i.e., System and Hankook Steel go up and down completely randomly.
Pair Corralation between System and Hankook Steel
Assuming the 90 days trading horizon System and Application is expected to generate 1.9 times more return on investment than Hankook Steel. However, System is 1.9 times more volatile than Hankook Steel Co. It trades about -0.04 of its potential returns per unit of risk. Hankook Steel Co is currently generating about -0.24 per unit of risk. If you would invest 155,000 in System and Application on November 3, 2024 and sell it today you would lose (3,700) from holding System and Application or give up 2.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
System and Application vs. Hankook Steel Co
Performance |
| Timeline |
| System and Application |
| Hankook Steel |
System and Hankook Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with System and Hankook Steel
The main advantage of trading using opposite System and Hankook Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if System position performs unexpectedly, Hankook 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 Hankook Steel will offset losses from the drop in Hankook Steel's long position.| System vs. Hyosung Advanced Materials | System vs. Kisan Telecom Co | System vs. Ssangyong Information Communication | System vs. TOPMATERIAL LTD |
| Hankook Steel vs. Seers Technology | Hankook Steel vs. NewFlex Technology Co | Hankook Steel vs. Kisan Telecom Co | Hankook Steel vs. Seoul Electronics 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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