Correlation Between Histeel and Raontech
Can any of the company-specific risk be diversified away by investing in both Histeel and Raontech 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 Raontech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Histeel and Raontech, you can compare the effects of market volatilities on Histeel and Raontech 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 Raontech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Histeel and Raontech.
Diversification Opportunities for Histeel and Raontech
Poor diversification
The 3 months correlation between Histeel and Raontech is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Histeel and Raontech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raontech 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 Raontech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raontech has no effect on the direction of Histeel i.e., Histeel and Raontech go up and down completely randomly.
Pair Corralation between Histeel and Raontech
Assuming the 90 days trading horizon Histeel is expected to generate 1.05 times more return on investment than Raontech. However, Histeel is 1.05 times more volatile than Raontech. It trades about -0.09 of its potential returns per unit of risk. Raontech is currently generating about -0.15 per unit of risk. If you would invest 480,000 in Histeel on September 3, 2024 and sell it today you would lose (175,000) from holding Histeel or give up 36.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Histeel vs. Raontech
Performance |
| Timeline |
| Histeel |
| Raontech |
Histeel and Raontech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Histeel and Raontech
The main advantage of trading using opposite Histeel and Raontech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Histeel position performs unexpectedly, Raontech 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 Raontech will offset losses from the drop in Raontech's long position.| Histeel vs. LG Chemicals | Histeel vs. POSCO Holdings | Histeel vs. Hanwha Solutions | Histeel vs. Lotte Chemical Corp |
| Raontech vs. Daiyang Metal Co | Raontech vs. SEOJEON ELECTRIC MACHINERY | Raontech vs. Hanjoo Light Metal | Raontech vs. Kbi Metal Co |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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