Correlation Between Korea Zinc and Hyunwoo Industrial

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

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

Diversification Opportunities for Korea Zinc and Hyunwoo Industrial

-0.78

Correlation Coefficient

Korea Zinc  Hyunwoo Industrial

Pay attention - limited upside

The 3 months correlation between Korea and Hyunwoo is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Korea Zinc and Hyunwoo Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyunwoo Industrial and Korea Zinc 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 Korea Zinc are associated (or correlated) with Hyunwoo Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyunwoo Industrial has no effect on the direction of Korea Zinc i.e., Korea Zinc and Hyunwoo Industrial go up and down completely randomly.

Pair Corralation between Korea Zinc and Hyunwoo Industrial

Assuming the 90 days trading horizon Korea Zinc is expected to under-perform the Hyunwoo Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Korea Zinc is 2.38 times less risky than Hyunwoo Industrial. The stock trades about -0.35 of its potential returns per unit of risk. The Hyunwoo Industrial Co is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest  213,204  in Hyunwoo Industrial Co on October 9, 2024 and sell it today you would earn a total of  48,296  from holding Hyunwoo Industrial Co or generate 22.65% return on investment over 90 days.

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

Korea Zinc  vs.  Hyunwoo Industrial Co

Korea Zinc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Zinc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Korea Zinc sustained solid returns over the last few months and may actually be approaching a breakup point.

Hyunwoo Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyunwoo Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Korea Zinc and Hyunwoo Industrial

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

The idea behind Korea Zinc and Hyunwoo Industrial 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.