Correlation Between Moonbae Steel and Husteel

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

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

Diversification Opportunities for Moonbae Steel and Husteel

0.53

Correlation Coefficient

Moonbae Steel  Husteel

Very weak diversification

The 3 months correlation between Moonbae and Husteel is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Moonbae Steel and Husteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Husteel and Moonbae 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 Moonbae Steel are associated (or correlated) with Husteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Husteel has no effect on the direction of Moonbae Steel i.e., Moonbae Steel and Husteel go up and down completely randomly.

Pair Corralation between Moonbae Steel and Husteel

Assuming the 90 days trading horizon Moonbae Steel is expected to under-perform the Husteel. But the stock apears to be less risky and, when comparing its historical volatility, Moonbae Steel is 1.4 times less risky than Husteel. The stock trades about -0.02 of its potential returns per unit of risk. The Husteel is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  483,702  in Husteel on September 20, 2024 and sell it today you would lose (88,702) from holding Husteel or give up 18.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Moonbae Steel  vs.  Husteel

Moonbae Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moonbae Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Moonbae Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Husteel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Husteel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Husteel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Moonbae Steel and Husteel

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

The idea behind Moonbae Steel and Husteel 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.