Correlation Between Daewoo SBI and Hankook Steel
Can any of the company-specific risk be diversified away by investing in both Daewoo SBI 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 Daewoo SBI and Hankook Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo SBI SPAC and Hankook Steel Co, you can compare the effects of market volatilities on Daewoo SBI 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 Daewoo SBI with a short position of Hankook Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo SBI and Hankook Steel.
Diversification Opportunities for Daewoo SBI and Hankook Steel
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daewoo and Hankook is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo SBI SPAC and Hankook Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankook Steel and Daewoo SBI 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 Daewoo SBI SPAC 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 Daewoo SBI i.e., Daewoo SBI and Hankook Steel go up and down completely randomly.
Pair Corralation between Daewoo SBI and Hankook Steel
Assuming the 90 days trading horizon Daewoo SBI SPAC is expected to under-perform the Hankook Steel. But the stock apears to be less risky and, when comparing its historical volatility, Daewoo SBI SPAC is 1.23 times less risky than Hankook Steel. The stock trades about -0.26 of its potential returns per unit of risk. The Hankook Steel Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 198,600 in Hankook Steel Co on August 29, 2024 and sell it today you would lose (4,100) from holding Hankook Steel Co or give up 2.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo SBI SPAC vs. Hankook Steel Co
Performance |
| Timeline |
| Daewoo SBI SPAC |
| Hankook Steel |
Daewoo SBI and Hankook Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo SBI and Hankook Steel
The main advantage of trading using opposite Daewoo SBI and Hankook Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo SBI 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.| Daewoo SBI vs. CU Medical Systems | Daewoo SBI vs. Sejong Telecom | Daewoo SBI vs. Digital Power Communications | Daewoo SBI vs. Lotte Non Life Insurance |
| Hankook Steel vs. AptaBio Therapeutics | Hankook Steel vs. Daewoo SBI SPAC | Hankook Steel vs. Dream Security co | Hankook 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |