Correlation Between Korea Investment and Hankuk Steel
Can any of the company-specific risk be diversified away by investing in both Korea Investment 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 Korea Investment and Hankuk Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Investment Holdings and Hankuk Steel Wire, you can compare the effects of market volatilities on Korea Investment 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 Korea Investment with a short position of Hankuk Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Investment and Hankuk Steel.
Diversification Opportunities for Korea Investment and Hankuk Steel
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Korea and Hankuk is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Korea Investment Holdings 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 Korea Investment 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 Investment Holdings 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 Korea Investment i.e., Korea Investment and Hankuk Steel go up and down completely randomly.
Pair Corralation between Korea Investment and Hankuk Steel
Assuming the 90 days trading horizon Korea Investment is expected to generate 3.73 times less return on investment than Hankuk Steel. But when comparing it to its historical volatility, Korea Investment Holdings is 3.56 times less risky than Hankuk Steel. It trades about 0.24 of its potential returns per unit of risk. Hankuk Steel Wire is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 400,500 in Hankuk Steel Wire on October 21, 2024 and sell it today you would earn a total of 69,500 from holding Hankuk Steel Wire or generate 17.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Investment Holdings vs. Hankuk Steel Wire
Performance |
| Timeline |
| Korea Investment Holdings |
| Hankuk Steel Wire |
Korea Investment and Hankuk Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Investment and Hankuk Steel
The main advantage of trading using opposite Korea Investment and Hankuk Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Investment 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.| Korea Investment vs. PJ Electronics Co | Korea Investment vs. Samyoung Electronics Co | Korea Investment vs. TS Investment Corp | Korea Investment vs. SV Investment |
| Hankuk Steel vs. LG Chemicals | Hankuk Steel vs. POSCO Holdings | Hankuk Steel vs. Lotte Chemical Corp | Hankuk Steel 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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