Correlation Between Heungkuk Metaltech and Automobile

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

Diversification Opportunities for Heungkuk Metaltech and Automobile

-0.3

Correlation Coefficient

Heungkuk Metaltech  Automobile

Very good diversification

The 3 months correlation between Heungkuk and Automobile is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Heungkuk Metaltech CoLtd and Automobile Pc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automobile Pc 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 Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automobile Pc has no effect on the direction of Heungkuk Metaltech i.e., Heungkuk Metaltech and Automobile go up and down completely randomly.

Pair Corralation between Heungkuk Metaltech and Automobile

Assuming the 90 days trading horizon Heungkuk Metaltech CoLtd is expected to generate 0.62 times more return on investment than Automobile. However, Heungkuk Metaltech CoLtd is 1.6 times less risky than Automobile. It trades about 0.07 of its potential returns per unit of risk. Automobile Pc is currently generating about -0.04 per unit of risk. If you would invest  479,500  in Heungkuk Metaltech CoLtd on September 24, 2024 and sell it today you would earn a total of  40,500  from holding Heungkuk Metaltech CoLtd or generate 8.45% return on investment over 90 days.

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

Heungkuk Metaltech CoLtd  vs.  Automobile Pc

Heungkuk Metaltech CoLtd

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Heungkuk Metaltech CoLtd are ranked lower than 5 (%) 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 January 2025.

Automobile Pc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Automobile Pc 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 Automobile

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

The idea behind Heungkuk Metaltech CoLtd and Automobile Pc 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.