Correlation Between Top Material and Hankuk Steel
Can any of the company-specific risk be diversified away by investing in both Top Material 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 Top Material and Hankuk Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Top Material Co and Hankuk Steel Wire, you can compare the effects of market volatilities on Top Material 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 Top Material with a short position of Hankuk Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Material and Hankuk Steel.
Diversification Opportunities for Top Material and Hankuk Steel
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Top and Hankuk is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Top Material Co 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 Top Material 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 Top Material Co 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 Top Material i.e., Top Material and Hankuk Steel go up and down completely randomly.
Pair Corralation between Top Material and Hankuk Steel
Assuming the 90 days trading horizon Top Material Co is expected to under-perform the Hankuk Steel. In addition to that, Top Material is 1.99 times more volatile than Hankuk Steel Wire. It trades about -0.18 of its total potential returns per unit of risk. Hankuk Steel Wire is currently generating about 0.13 per unit of volatility. If you would invest 285,500 in Hankuk Steel Wire on August 30, 2024 and sell it today you would earn a total of 14,000 from holding Hankuk Steel Wire or generate 4.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Top Material Co vs. Hankuk Steel Wire
Performance |
| Timeline |
| Top Material |
| Hankuk Steel Wire |
Top Material and Hankuk Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Top Material and Hankuk Steel
The main advantage of trading using opposite Top Material and Hankuk Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Material 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.| Top Material vs. Samsung Electronics Co | Top Material vs. Samsung Electronics Co | Top Material vs. LG Energy Solution | Top Material vs. SK Hynix |
| Hankuk Steel vs. Top Material Co | Hankuk Steel vs. Iljin Materials Co | Hankuk Steel vs. INNOX Advanced Materials | Hankuk Steel vs. Digital Multimedia Technology |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |