Correlation Between Heungkuk Metaltech and Yura Tech

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

Diversification Opportunities for Heungkuk Metaltech and Yura Tech

0.81

Correlation Coefficient

Heungkuk Metaltech  Yura Tech

Very poor diversification

The 3 months correlation between Heungkuk and Yura is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Heungkuk Metaltech CoLtd and Yura Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yura Tech 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 Yura Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yura Tech has no effect on the direction of Heungkuk Metaltech i.e., Heungkuk Metaltech and Yura Tech go up and down completely randomly.

Pair Corralation between Heungkuk Metaltech and Yura Tech

Assuming the 90 days trading horizon Heungkuk Metaltech is expected to generate 13.03 times less return on investment than Yura Tech. But when comparing it to its historical volatility, Heungkuk Metaltech CoLtd is 1.91 times less risky than Yura Tech. It trades about 0.0 of its potential returns per unit of risk. Yura Tech Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  750,414  in Yura Tech Co on October 4, 2024 and sell it today you would earn a total of  12,586  from holding Yura Tech Co or generate 1.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.79%
Values	Daily Returns

Heungkuk Metaltech CoLtd  vs.  Yura Tech Co

Heungkuk Metaltech CoLtd

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Heungkuk Metaltech CoLtd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Heungkuk Metaltech sustained solid returns over the last few months and may actually be approaching a breakup point.

Yura Tech

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yura Tech Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yura Tech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heungkuk Metaltech and Yura Tech

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

The idea behind Heungkuk Metaltech CoLtd and Yura Tech 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.