Correlation Between Histeel and Signetics
Can any of the company-specific risk be diversified away by investing in both Histeel and Signetics 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 Signetics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Histeel and Signetics, you can compare the effects of market volatilities on Histeel and Signetics 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 Signetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Histeel and Signetics.
Diversification Opportunities for Histeel and Signetics
Poor diversification
The 3 months correlation between Histeel and Signetics is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Histeel and Signetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signetics 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 Signetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signetics has no effect on the direction of Histeel i.e., Histeel and Signetics go up and down completely randomly.
Pair Corralation between Histeel and Signetics
Assuming the 90 days trading horizon Histeel is expected to generate 0.86 times more return on investment than Signetics. However, Histeel is 1.16 times less risky than Signetics. It trades about 0.0 of its potential returns per unit of risk. Signetics is currently generating about -0.01 per unit of risk. If you would invest 345,927 in Histeel on September 1, 2024 and sell it today you would lose (40,927) from holding Histeel or give up 11.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.62% |
| Values | Daily Returns |
Histeel vs. Signetics
Performance |
| Timeline |
| Histeel |
| Signetics |
Histeel and Signetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Histeel and Signetics
The main advantage of trading using opposite Histeel and Signetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Histeel position performs unexpectedly, Signetics 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 Signetics will offset losses from the drop in Signetics' long position.| Histeel vs. LG Chemicals | Histeel vs. POSCO Holdings | Histeel vs. Hanwha Solutions | Histeel vs. Hyundai Steel |
| Signetics vs. Hanjoo Light Metal | Signetics vs. Dongil Metal Co | Signetics vs. Shinhan Inverse Copper | Signetics vs. Iljin Display |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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