Correlation Between KPX Green and Hwangkum Steel
Can any of the company-specific risk be diversified away by investing in both KPX Green and Hwangkum 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 KPX Green and Hwangkum Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KPX Green Chemical and Hwangkum Steel Technology, you can compare the effects of market volatilities on KPX Green and Hwangkum 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 KPX Green with a short position of Hwangkum Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of KPX Green and Hwangkum Steel.
Diversification Opportunities for KPX Green and Hwangkum Steel
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KPX and Hwangkum is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding KPX Green Chemical and Hwangkum Steel Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwangkum Steel Technology and KPX Green 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 KPX Green Chemical are associated (or correlated) with Hwangkum Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwangkum Steel Technology has no effect on the direction of KPX Green i.e., KPX Green and Hwangkum Steel go up and down completely randomly.
Pair Corralation between KPX Green and Hwangkum Steel
Assuming the 90 days trading horizon KPX Green Chemical is expected to under-perform the Hwangkum Steel. In addition to that, KPX Green is 13.3 times more volatile than Hwangkum Steel Technology. It trades about -0.08 of its total potential returns per unit of risk. Hwangkum Steel Technology is currently generating about -0.33 per unit of volatility. If you would invest 498,500 in Hwangkum Steel Technology on November 6, 2024 and sell it today you would lose (9,500) from holding Hwangkum Steel Technology or give up 1.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KPX Green Chemical vs. Hwangkum Steel Technology
Performance |
| Timeline |
| KPX Green Chemical |
| Hwangkum Steel Technology |
KPX Green and Hwangkum Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KPX Green and Hwangkum Steel
The main advantage of trading using opposite KPX Green and Hwangkum Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KPX Green position performs unexpectedly, Hwangkum 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 Hwangkum Steel will offset losses from the drop in Hwangkum Steel's long position.| KPX Green vs. Heungkuk Metaltech CoLtd | KPX Green vs. Pureun Mutual Savings | KPX Green vs. Seoyon Topmetal Co | KPX Green vs. DB Insurance Co |
| Hwangkum Steel vs. Hankook Furniture Co | Hwangkum Steel vs. Cuckoo Homesys Co | Hwangkum Steel vs. Samyung Trading Co | Hwangkum Steel vs. Korea Investment Holdings |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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