Correlation Between Histeel and Han Kook
Can any of the company-specific risk be diversified away by investing in both Histeel and Han Kook 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 Histeel and Han Kook into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Histeel and Han Kook Steel, you can compare the effects of market volatilities on Histeel and Han Kook 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 Histeel with a short position of Han Kook. Check out your portfolio center. Please also check ongoing floating volatility patterns of Histeel and Han Kook.
Diversification Opportunities for Histeel and Han Kook
Very weak diversification
The 3 months correlation between Histeel and Han is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Histeel and Han Kook Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Han Kook Steel and Histeel 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 Histeel are associated (or correlated) with Han Kook. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Han Kook Steel has no effect on the direction of Histeel i.e., Histeel and Han Kook go up and down completely randomly.
Pair Corralation between Histeel and Han Kook
Assuming the 90 days trading horizon Histeel is expected to generate 1.64 times more return on investment than Han Kook. However, Histeel is 1.64 times more volatile than Han Kook Steel. It trades about 0.17 of its potential returns per unit of risk. Han Kook Steel is currently generating about -0.24 per unit of risk. If you would invest 273,500 in Histeel on November 3, 2024 and sell it today you would earn a total of 18,500 from holding Histeel 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 |
Histeel vs. Han Kook Steel
Performance |
| Timeline |
| Histeel |
| Han Kook Steel |
Histeel and Han Kook Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Histeel and Han Kook
The main advantage of trading using opposite Histeel and Han Kook positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Histeel position performs unexpectedly, Han Kook 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 Han Kook will offset losses from the drop in Han Kook's long position.| Histeel vs. LG Chemicals | Histeel vs. POSCO Holdings | Histeel vs. Hanwha Solutions | Histeel vs. Lotte Chemical Corp |
| Han Kook vs. E Investment Development | Han Kook vs. Daol Investment Securities | Han Kook vs. Atinum Investment Co | Han Kook vs. KTB Investment Securities |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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