Correlation Between Ecopro and Hankuk Steel
Can any of the company-specific risk be diversified away by investing in both Ecopro and Hankuk 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 Ecopro and Hankuk Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecopro Co and Hankuk Steel Wire, you can compare the effects of market volatilities on Ecopro and Hankuk 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 Ecopro with a short position of Hankuk Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopro and Hankuk Steel.
Diversification Opportunities for Ecopro and Hankuk Steel
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ecopro and Hankuk is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ecopro Co and Hankuk Steel Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankuk Steel Wire and Ecopro 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 Ecopro Co are associated (or correlated) with Hankuk Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankuk Steel Wire has no effect on the direction of Ecopro i.e., Ecopro and Hankuk Steel go up and down completely randomly.
Pair Corralation between Ecopro and Hankuk Steel
Assuming the 90 days trading horizon Ecopro Co is expected to under-perform the Hankuk Steel. But the stock apears to be less risky and, when comparing its historical volatility, Ecopro Co is 1.17 times less risky than Hankuk Steel. The stock trades about -0.07 of its potential returns per unit of risk. The Hankuk Steel Wire is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 406,000 in Hankuk Steel Wire on November 6, 2024 and sell it today you would earn a total of 13,000 from holding Hankuk Steel Wire or generate 3.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.12% |
| Values | Daily Returns |
Ecopro Co vs. Hankuk Steel Wire
Performance |
| Timeline |
| Ecopro |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hankuk Steel Wire |
Ecopro and Hankuk Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopro and Hankuk Steel
The main advantage of trading using opposite Ecopro and Hankuk Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopro position performs unexpectedly, Hankuk 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 Hankuk Steel will offset losses from the drop in Hankuk Steel's long position.The idea behind Ecopro Co and Hankuk Steel Wire pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hankuk Steel vs. Hanmi Semiconductor Co | Hankuk Steel vs. BGF Retail Co | Hankuk Steel vs. Daejung Chemicals Metals | Hankuk Steel vs. ABOV Semiconductor 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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