Correlation Between Lion Chemtech and Hwangkum Steel
Can any of the company-specific risk be diversified away by investing in both Lion Chemtech and Hwangkum 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 Lion Chemtech and Hwangkum Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Chemtech Co and Hwangkum Steel Technology, you can compare the effects of market volatilities on Lion Chemtech and Hwangkum 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 Lion Chemtech with a short position of Hwangkum Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Chemtech and Hwangkum Steel.
Diversification Opportunities for Lion Chemtech and Hwangkum Steel
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lion and Hwangkum is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lion Chemtech Co and Hwangkum Steel Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwangkum Steel Technology and Lion Chemtech 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 Lion Chemtech Co are associated (or correlated) with Hwangkum Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwangkum Steel Technology has no effect on the direction of Lion Chemtech i.e., Lion Chemtech and Hwangkum Steel go up and down completely randomly.
Pair Corralation between Lion Chemtech and Hwangkum Steel
Assuming the 90 days trading horizon Lion Chemtech Co is expected to generate 1.84 times more return on investment than Hwangkum Steel. However, Lion Chemtech is 1.84 times more volatile than Hwangkum Steel Technology. It trades about -0.02 of its potential returns per unit of risk. Hwangkum Steel Technology is currently generating about -0.15 per unit of risk. If you would invest 276,000 in Lion Chemtech Co on September 5, 2024 and sell it today you would lose (26,000) from holding Lion Chemtech Co or give up 9.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Chemtech Co vs. Hwangkum Steel Technology
Performance |
| Timeline |
| Lion Chemtech |
| Hwangkum Steel Technology |
Lion Chemtech and Hwangkum Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Chemtech and Hwangkum Steel
The main advantage of trading using opposite Lion Chemtech and Hwangkum Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Chemtech position performs unexpectedly, Hwangkum 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 Hwangkum Steel will offset losses from the drop in Hwangkum Steel's long position.The idea behind Lion Chemtech Co and Hwangkum Steel Technology 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.| Hwangkum Steel vs. AptaBio Therapeutics | Hwangkum Steel vs. Daewoo SBI SPAC | Hwangkum Steel vs. Dream Security co | Hwangkum Steel vs. Microfriend |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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