Correlation Between Hanjoo Light and Gyeongnam Steel
Can any of the company-specific risk be diversified away by investing in both Hanjoo Light and Gyeongnam 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 Hanjoo Light and Gyeongnam Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanjoo Light Metal and Gyeongnam Steel Co, you can compare the effects of market volatilities on Hanjoo Light and Gyeongnam 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 Hanjoo Light with a short position of Gyeongnam Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjoo Light and Gyeongnam Steel.
Diversification Opportunities for Hanjoo Light and Gyeongnam Steel
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hanjoo and Gyeongnam is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hanjoo Light Metal and Gyeongnam Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gyeongnam Steel and Hanjoo Light 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 Hanjoo Light Metal are associated (or correlated) with Gyeongnam Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gyeongnam Steel has no effect on the direction of Hanjoo Light i.e., Hanjoo Light and Gyeongnam Steel go up and down completely randomly.
Pair Corralation between Hanjoo Light and Gyeongnam Steel
Assuming the 90 days trading horizon Hanjoo Light Metal is expected to under-perform the Gyeongnam Steel. In addition to that, Hanjoo Light is 1.39 times more volatile than Gyeongnam Steel Co. It trades about -0.05 of its total potential returns per unit of risk. Gyeongnam Steel Co is currently generating about 0.05 per unit of volatility. If you would invest 297,576 in Gyeongnam Steel Co on November 29, 2024 and sell it today you would earn a total of 187,424 from holding Gyeongnam Steel Co or generate 62.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanjoo Light Metal vs. Gyeongnam Steel Co
Performance |
| Timeline |
| Hanjoo Light Metal |
| Gyeongnam Steel |
Hanjoo Light and Gyeongnam Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjoo Light and Gyeongnam Steel
The main advantage of trading using opposite Hanjoo Light and Gyeongnam Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjoo Light position performs unexpectedly, Gyeongnam 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 Gyeongnam Steel will offset losses from the drop in Gyeongnam Steel's long position.| Hanjoo Light vs. Dongbu Insurance Co | Hanjoo Light vs. Digital Multimedia Technology | Hanjoo Light vs. FNC Entertainment Co | Hanjoo Light vs. Koryo Credit Information |
| Gyeongnam Steel vs. DC Media Co | Gyeongnam Steel vs. Nasmedia Co | Gyeongnam Steel vs. CKH Food Health | Gyeongnam Steel vs. JYP Entertainment Corp |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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