Correlation Between Narae Nanotech and Hankook Steel
Can any of the company-specific risk be diversified away by investing in both Narae Nanotech 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 Narae Nanotech and Hankook Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Narae Nanotech Corp and Hankook Steel Co, you can compare the effects of market volatilities on Narae Nanotech 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 Narae Nanotech with a short position of Hankook Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Narae Nanotech and Hankook Steel.
Diversification Opportunities for Narae Nanotech and Hankook Steel
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Narae and Hankook is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Narae Nanotech Corp and Hankook Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankook Steel and Narae Nanotech 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 Narae Nanotech Corp 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 Narae Nanotech i.e., Narae Nanotech and Hankook Steel go up and down completely randomly.
Pair Corralation between Narae Nanotech and Hankook Steel
Assuming the 90 days trading horizon Narae Nanotech Corp is expected to generate 0.81 times more return on investment than Hankook Steel. However, Narae Nanotech Corp is 1.23 times less risky than Hankook Steel. It trades about 0.02 of its potential returns per unit of risk. Hankook Steel Co is currently generating about -0.01 per unit of risk. If you would invest 325,000 in Narae Nanotech Corp on October 30, 2024 and sell it today you would earn a total of 500.00 from holding Narae Nanotech Corp or generate 0.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Narae Nanotech Corp vs. Hankook Steel Co
Performance |
Timeline |
Narae Nanotech Corp |
Hankook Steel |
Narae Nanotech and Hankook Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Narae Nanotech and Hankook Steel
The main advantage of trading using opposite Narae Nanotech and Hankook Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Narae Nanotech 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.Narae Nanotech vs. Ssangyong Information Communication | Narae Nanotech vs. Jin Air Co | Narae Nanotech vs. Tway Air Co | Narae Nanotech vs. Inzi Display CoLtd |
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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.
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