Correlation Between Heungkuk Metaltech and Husteel

Can any of the company-specific risk be diversified away by investing in both Heungkuk Metaltech 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 Heungkuk Metaltech and Husteel 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 Husteel, you can compare the effects of market volatilities on Heungkuk Metaltech 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 Heungkuk Metaltech with a short position of Husteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heungkuk Metaltech and Husteel.

Diversification Opportunities for Heungkuk Metaltech and Husteel

-0.58

Correlation Coefficient

Heungkuk Metaltech  Husteel

Excellent diversification

The 3 months correlation between Heungkuk and Husteel is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Heungkuk Metaltech CoLtd and Husteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Husteel 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 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 Heungkuk Metaltech i.e., Heungkuk Metaltech and Husteel go up and down completely randomly.

Pair Corralation between Heungkuk Metaltech and Husteel

Assuming the 90 days trading horizon Heungkuk Metaltech CoLtd is expected to generate 1.16 times more return on investment than Husteel. However, Heungkuk Metaltech is 1.16 times more volatile than Husteel. It trades about 0.08 of its potential returns per unit of risk. Husteel is currently generating about 0.0 per unit of risk. If you would invest  482,964  in Heungkuk Metaltech CoLtd on October 12, 2024 and sell it today you would earn a total of  45,036  from holding Heungkuk Metaltech CoLtd or generate 9.32% return on investment over 90 days.

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

Heungkuk Metaltech CoLtd  vs.  Husteel

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.

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 Heungkuk Metaltech and Husteel

The main advantage of trading using opposite Heungkuk Metaltech and Husteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heungkuk Metaltech 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 Heungkuk Metaltech CoLtd 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 Transaction History module to view history of all your transactions and understand their impact on performance.