Correlation Between Mobile Appliance and Hankuk Steel
Can any of the company-specific risk be diversified away by investing in both Mobile Appliance 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 Mobile Appliance and Hankuk Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mobile Appliance and Hankuk Steel Wire, you can compare the effects of market volatilities on Mobile Appliance 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 Mobile Appliance with a short position of Hankuk Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mobile Appliance and Hankuk Steel.
Diversification Opportunities for Mobile Appliance and Hankuk Steel
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mobile and Hankuk is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Mobile Appliance 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 Mobile Appliance 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 Mobile Appliance 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 Mobile Appliance i.e., Mobile Appliance and Hankuk Steel go up and down completely randomly.
Pair Corralation between Mobile Appliance and Hankuk Steel
Assuming the 90 days trading horizon Mobile Appliance is expected to generate 2.02 times more return on investment than Hankuk Steel. However, Mobile Appliance is 2.02 times more volatile than Hankuk Steel Wire. It trades about 0.04 of its potential returns per unit of risk. Hankuk Steel Wire is currently generating about 0.03 per unit of risk. If you would invest 209,000 in Mobile Appliance on September 1, 2024 and sell it today you would earn a total of 3,500 from holding Mobile Appliance or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mobile Appliance vs. Hankuk Steel Wire
Performance |
| Timeline |
| Mobile Appliance |
| Hankuk Steel Wire |
Mobile Appliance and Hankuk Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mobile Appliance and Hankuk Steel
The main advantage of trading using opposite Mobile Appliance and Hankuk Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mobile Appliance 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.| Mobile Appliance vs. Hankook Steel Co | Mobile Appliance vs. Histeel | Mobile Appliance vs. Ni Steel | Mobile Appliance vs. Daechang Steel Co |
| Hankuk Steel vs. TS Investment Corp | Hankuk Steel vs. Atinum Investment Co | Hankuk Steel vs. Mobile Appliance | Hankuk Steel vs. Mobileleader CoLtd |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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