Correlation Between Daehan Steel and Hankook Steel
Can any of the company-specific risk be diversified away by investing in both Daehan Steel and Hankook 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 Daehan Steel and Hankook Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daehan Steel and Hankook Steel Co, you can compare the effects of market volatilities on Daehan Steel and Hankook 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 Daehan Steel with a short position of Hankook Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daehan Steel and Hankook Steel.
Diversification Opportunities for Daehan Steel and Hankook Steel
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Daehan and Hankook is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Daehan Steel and Hankook Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankook Steel and Daehan Steel 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 Daehan Steel are associated (or correlated) with Hankook Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankook Steel has no effect on the direction of Daehan Steel i.e., Daehan Steel and Hankook Steel go up and down completely randomly.
Pair Corralation between Daehan Steel and Hankook Steel
Assuming the 90 days trading horizon Daehan Steel is expected to generate 0.17 times more return on investment than Hankook Steel. However, Daehan Steel is 5.89 times less risky than Hankook Steel. It trades about 0.44 of its potential returns per unit of risk. Hankook Steel Co is currently generating about 0.03 per unit of risk. If you would invest 1,439,000 in Daehan Steel on September 13, 2024 and sell it today you would earn a total of 176,000 from holding Daehan Steel or generate 12.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daehan Steel vs. Hankook Steel Co
Performance |
| Timeline |
| Daehan Steel |
| Hankook Steel |
Daehan Steel and Hankook Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daehan Steel and Hankook Steel
The main advantage of trading using opposite Daehan Steel and Hankook Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daehan Steel position performs unexpectedly, Hankook 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 Hankook Steel will offset losses from the drop in Hankook Steel's long position.| Daehan Steel vs. LG Chemicals | Daehan Steel vs. POSCO Holdings | Daehan Steel vs. Hanwha Solutions | Daehan Steel vs. Lotte Chemical Corp |
| Hankook Steel vs. Display Tech Co | Hankook Steel vs. Ssangyong Information Communication | Hankook Steel vs. Korea Computer | Hankook Steel vs. Digital Power Communications |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |