Correlation Between Hyosung Chemical and Hankook Steel
Can any of the company-specific risk be diversified away by investing in both Hyosung Chemical 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 Hyosung Chemical and Hankook Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyosung Chemical Corp and Hankook Steel Co, you can compare the effects of market volatilities on Hyosung Chemical 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 Hyosung Chemical with a short position of Hankook Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyosung Chemical and Hankook Steel.
Diversification Opportunities for Hyosung Chemical and Hankook Steel
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hyosung and Hankook is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Hyosung Chemical Corp and Hankook Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankook Steel and Hyosung Chemical 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 Hyosung Chemical Corp 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 Hyosung Chemical i.e., Hyosung Chemical and Hankook Steel go up and down completely randomly.
Pair Corralation between Hyosung Chemical and Hankook Steel
Assuming the 90 days trading horizon Hyosung Chemical Corp is expected to under-perform the Hankook Steel. In addition to that, Hyosung Chemical is 1.03 times more volatile than Hankook Steel Co. It trades about -0.05 of its total potential returns per unit of risk. Hankook Steel Co is currently generating about 0.0 per unit of volatility. If you would invest 286,000 in Hankook Steel Co on September 5, 2024 and sell it today you would lose (81,500) from holding Hankook Steel Co or give up 28.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyosung Chemical Corp vs. Hankook Steel Co
Performance |
| Timeline |
| Hyosung Chemical Corp |
| Hankook Steel |
Hyosung Chemical and Hankook Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyosung Chemical and Hankook Steel
The main advantage of trading using opposite Hyosung Chemical and Hankook Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyosung Chemical 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.| Hyosung Chemical vs. LG Chem | Hyosung Chemical vs. DukSan Neolux CoLtd | Hyosung Chemical vs. LIG ES SPAC | Hyosung Chemical vs. Sukgyung AT Co |
| 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 Positions Ratings module to 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.
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