Correlation Between Heungkuk Metaltech and Formetal

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

Diversification Opportunities for Heungkuk Metaltech and Formetal

0.77

Correlation Coefficient

Heungkuk Metaltech  Formetal

Poor diversification

The 3 months correlation between Heungkuk and Formetal is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Heungkuk Metaltech CoLtd and Formetal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formetal 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 Formetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formetal has no effect on the direction of Heungkuk Metaltech i.e., Heungkuk Metaltech and Formetal go up and down completely randomly.

Pair Corralation between Heungkuk Metaltech and Formetal

Assuming the 90 days trading horizon Heungkuk Metaltech CoLtd is expected to under-perform the Formetal. But the stock apears to be less risky and, when comparing its historical volatility, Heungkuk Metaltech CoLtd is 1.7 times less risky than Formetal. The stock trades about -0.01 of its potential returns per unit of risk. The Formetal Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  357,692  in Formetal Co on October 4, 2024 and sell it today you would lose (19,692) from holding Formetal Co or give up 5.51% of portfolio value over 90 days.

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

Heungkuk Metaltech CoLtd  vs.  Formetal 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.

Formetal

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Formetal Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Formetal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Heungkuk Metaltech and Formetal

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

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