Correlation Between Moonbae Steel and Heungkuk Metaltech

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

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

Diversification Opportunities for Moonbae Steel and Heungkuk Metaltech

-0.32

Correlation Coefficient

Moonbae Steel  Heungkuk Metaltech

Very good diversification

The 3 months correlation between Moonbae and Heungkuk is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Moonbae Steel and Heungkuk Metaltech CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heungkuk Metaltech CoLtd 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 Heungkuk Metaltech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heungkuk Metaltech CoLtd has no effect on the direction of Moonbae Steel i.e., Moonbae Steel and Heungkuk Metaltech go up and down completely randomly.

Pair Corralation between Moonbae Steel and Heungkuk Metaltech

Assuming the 90 days trading horizon Moonbae Steel is expected to under-perform the Heungkuk Metaltech. In addition to that, Moonbae Steel is 1.26 times more volatile than Heungkuk Metaltech CoLtd. It trades about 0.0 of its total potential returns per unit of risk. Heungkuk Metaltech CoLtd is currently generating about 0.09 per unit of volatility. If you would invest  476,269  in Heungkuk Metaltech CoLtd on October 11, 2024 and sell it today you would earn a total of  52,731  from holding Heungkuk Metaltech CoLtd or generate 11.07% return on investment over 90 days.

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

Moonbae Steel  vs.  Heungkuk Metaltech CoLtd

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.

Heungkuk Metaltech CoLtd

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Heungkuk Metaltech CoLtd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Heungkuk Metaltech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Moonbae Steel and Heungkuk Metaltech

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

The idea behind Moonbae Steel and Heungkuk Metaltech CoLtd 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.