Correlation Between Cheryong Industrial and Histeel
Can any of the company-specific risk be diversified away by investing in both Cheryong Industrial and Histeel 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 Cheryong Industrial and Histeel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheryong Industrial CoLtd and Histeel, you can compare the effects of market volatilities on Cheryong Industrial and Histeel 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 Cheryong Industrial with a short position of Histeel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheryong Industrial and Histeel.
Diversification Opportunities for Cheryong Industrial and Histeel
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cheryong and Histeel is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial CoLtd and Histeel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Histeel and Cheryong Industrial 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 Cheryong Industrial CoLtd are associated (or correlated) with Histeel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Histeel has no effect on the direction of Cheryong Industrial i.e., Cheryong Industrial and Histeel go up and down completely randomly.
Pair Corralation between Cheryong Industrial and Histeel
Assuming the 90 days trading horizon Cheryong Industrial CoLtd is expected to under-perform the Histeel. But the stock apears to be less risky and, when comparing its historical volatility, Cheryong Industrial CoLtd is 1.17 times less risky than Histeel. The stock trades about -0.19 of its potential returns per unit of risk. The Histeel is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 317,000 in Histeel on September 5, 2024 and sell it today you would lose (13,000) from holding Histeel or give up 4.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheryong Industrial CoLtd vs. Histeel
Performance |
| Timeline |
| Cheryong Industrial CoLtd |
| Histeel |
Cheryong Industrial and Histeel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheryong Industrial and Histeel
The main advantage of trading using opposite Cheryong Industrial and Histeel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheryong Industrial position performs unexpectedly, Histeel 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 Histeel will offset losses from the drop in Histeel's long position.| Cheryong Industrial vs. Sungchang Autotech Co | Cheryong Industrial vs. Woori Technology | Cheryong Industrial vs. Narae Nanotech Corp | Cheryong Industrial vs. SS TECH |
| Histeel vs. LG Chemicals | Histeel vs. POSCO Holdings | Histeel vs. Lotte Chemical Corp | Histeel vs. Hyundai Steel |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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