Correlation Between INNOX Advanced and Hankuk Steel
Can any of the company-specific risk be diversified away by investing in both INNOX Advanced and Hankuk 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 INNOX Advanced and Hankuk Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INNOX Advanced Materials and Hankuk Steel Wire, you can compare the effects of market volatilities on INNOX Advanced and Hankuk 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 INNOX Advanced with a short position of Hankuk Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of INNOX Advanced and Hankuk Steel.
Diversification Opportunities for INNOX Advanced and Hankuk Steel
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between INNOX and Hankuk is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding INNOX Advanced Materials and Hankuk Steel Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankuk Steel Wire and INNOX Advanced 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 INNOX Advanced Materials are associated (or correlated) with Hankuk Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankuk Steel Wire has no effect on the direction of INNOX Advanced i.e., INNOX Advanced and Hankuk Steel go up and down completely randomly.
Pair Corralation between INNOX Advanced and Hankuk Steel
Assuming the 90 days trading horizon INNOX Advanced Materials is expected to generate 1.5 times more return on investment than Hankuk Steel. However, INNOX Advanced is 1.5 times more volatile than Hankuk Steel Wire. It trades about 0.09 of its potential returns per unit of risk. Hankuk Steel Wire is currently generating about -0.21 per unit of risk. If you would invest 2,710,000 in INNOX Advanced Materials on November 28, 2024 and sell it today you would earn a total of 155,000 from holding INNOX Advanced Materials or generate 5.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INNOX Advanced Materials vs. Hankuk Steel Wire
Performance |
| Timeline |
| INNOX Advanced Materials |
| Hankuk Steel Wire |
INNOX Advanced and Hankuk Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INNOX Advanced and Hankuk Steel
The main advantage of trading using opposite INNOX Advanced and Hankuk Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INNOX Advanced position performs unexpectedly, Hankuk 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 Hankuk Steel will offset losses from the drop in Hankuk Steel's long position.| INNOX Advanced vs. Hotel Shilla Co | INNOX Advanced vs. Industrial Bank | INNOX Advanced vs. Value Added Technology | INNOX Advanced vs. Global Standard Technology |
| Hankuk Steel vs. SK Chemicals Co | Hankuk Steel vs. Jin Air Co | Hankuk Steel vs. Green Cross Medical | Hankuk Steel vs. Cloud Air CoLtd |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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