Correlation Between Seah Steel and HS Valve
Can any of the company-specific risk be diversified away by investing in both Seah Steel and HS Valve 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 Seah Steel and HS Valve into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seah Steel Corp and HS Valve Co, you can compare the effects of market volatilities on Seah Steel and HS Valve 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 Seah Steel with a short position of HS Valve. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seah Steel and HS Valve.
Diversification Opportunities for Seah Steel and HS Valve
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Seah and 039610 is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Seah Steel Corp and HS Valve Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HS Valve and Seah Steel 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 Seah Steel Corp are associated (or correlated) with HS Valve. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HS Valve has no effect on the direction of Seah Steel i.e., Seah Steel and HS Valve go up and down completely randomly.
Pair Corralation between Seah Steel and HS Valve
Assuming the 90 days trading horizon Seah Steel is expected to generate 3.8 times less return on investment than HS Valve. But when comparing it to its historical volatility, Seah Steel Corp is 2.57 times less risky than HS Valve. It trades about 0.02 of its potential returns per unit of risk. HS Valve Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,215,000 in HS Valve Co on August 29, 2024 and sell it today you would earn a total of 36,000 from holding HS Valve Co or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seah Steel Corp vs. HS Valve Co
Performance |
| Timeline |
| Seah Steel Corp |
| HS Valve |
Seah Steel and HS Valve Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seah Steel and HS Valve
The main advantage of trading using opposite Seah Steel and HS Valve positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seah Steel position performs unexpectedly, HS Valve 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 HS Valve will offset losses from the drop in HS Valve's long position.| Seah Steel vs. Dong Il Steel | Seah Steel vs. Ajusteel Co | Seah Steel vs. Korea Steel Co | Seah Steel vs. Bookook Steel |
| HS Valve vs. Han Kook Steel | HS Valve vs. Dongbu Steel Co | HS Valve vs. Seah Steel Corp | HS Valve vs. Hankook Steel Co |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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