Correlation Between Heungkuk Metaltech and SH Energy

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

By analyzing existing cross correlation between Heungkuk Metaltech CoLtd and SH Energy Chemical, you can compare the effects of market volatilities on Heungkuk Metaltech and SH Energy 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 Heungkuk Metaltech with a short position of SH Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heungkuk Metaltech and SH Energy.

Diversification Opportunities for Heungkuk Metaltech and SH Energy

-0.17

Correlation Coefficient

Heungkuk Metaltech  SH Energy

Good diversification

The 3 months correlation between Heungkuk and 002360 is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Heungkuk Metaltech CoLtd and SH Energy Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SH Energy Chemical and Heungkuk Metaltech 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 Heungkuk Metaltech CoLtd are associated (or correlated) with SH Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SH Energy Chemical has no effect on the direction of Heungkuk Metaltech i.e., Heungkuk Metaltech and SH Energy go up and down completely randomly.

Pair Corralation between Heungkuk Metaltech and SH Energy

Assuming the 90 days trading horizon Heungkuk Metaltech CoLtd is expected to generate 1.0 times more return on investment than SH Energy. However, Heungkuk Metaltech is 1.0 times more volatile than SH Energy Chemical. It trades about -0.02 of its potential returns per unit of risk. SH Energy Chemical is currently generating about -0.12 per unit of risk. If you would invest  526,000  in Heungkuk Metaltech CoLtd on December 26, 2024 and sell it today you would lose (12,000) from holding Heungkuk Metaltech CoLtd or give up 2.28% of portfolio value over 90 days.

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

Heungkuk Metaltech CoLtd  vs.  SH Energy Chemical

Heungkuk Metaltech CoLtd

Risk-Adjusted Performance

Very Weak

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

SH Energy Chemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days SH Energy Chemical 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 Heungkuk Metaltech and SH Energy

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

The idea behind Heungkuk Metaltech CoLtd and SH Energy Chemical 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.