Correlation Between Husteel and Shin Steel

Can any of the company-specific risk be diversified away by investing in both Husteel and Shin 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 Husteel and Shin Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Husteel and Shin Steel Co, you can compare the effects of market volatilities on Husteel and Shin 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 Husteel with a short position of Shin Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Husteel and Shin Steel.

Diversification Opportunities for Husteel and Shin Steel

0.3

Correlation Coefficient

Husteel  Shin Steel

Weak diversification

The 3 months correlation between Husteel and Shin is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Husteel and Shin Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Steel and Husteel 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 Husteel are associated (or correlated) with Shin Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Steel has no effect on the direction of Husteel i.e., Husteel and Shin Steel go up and down completely randomly.

Pair Corralation between Husteel and Shin Steel

Assuming the 90 days trading horizon Husteel is expected to generate 1.9 times more return on investment than Shin Steel. However, Husteel is 1.9 times more volatile than Shin Steel Co. It trades about 0.14 of its potential returns per unit of risk. Shin Steel Co is currently generating about -0.09 per unit of risk. If you would invest  378,000  in Husteel on December 29, 2024 and sell it today you would earn a total of  133,000  from holding Husteel or generate 35.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Husteel  vs.  Shin Steel Co

Husteel

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Husteel are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Husteel sustained solid returns over the last few months and may actually be approaching a breakup point.

Shin Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shin Steel Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Husteel and Shin Steel

The main advantage of trading using opposite Husteel and Shin Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Husteel position performs unexpectedly, Shin 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 Shin Steel will offset losses from the drop in Shin Steel's long position.

The idea behind Husteel and Shin Steel Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.