Correlation Between Heungkuk Metaltech and RF Materials

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

Diversification Opportunities for Heungkuk Metaltech and RF Materials

-0.72

Correlation Coefficient

Heungkuk Metaltech  RF Materials

Pay attention - limited upside

The 3 months correlation between Heungkuk and 327260 is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Heungkuk Metaltech CoLtd and RF Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Materials 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 RF Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Materials has no effect on the direction of Heungkuk Metaltech i.e., Heungkuk Metaltech and RF Materials go up and down completely randomly.

Pair Corralation between Heungkuk Metaltech and RF Materials

Assuming the 90 days trading horizon Heungkuk Metaltech CoLtd is expected to generate 0.56 times more return on investment than RF Materials. However, Heungkuk Metaltech CoLtd is 1.78 times less risky than RF Materials. It trades about 0.09 of its potential returns per unit of risk. RF Materials Co is currently generating about -0.04 per unit of risk. If you would invest  468,140  in Heungkuk Metaltech CoLtd on October 25, 2024 and sell it today you would earn a total of  51,860  from holding Heungkuk Metaltech CoLtd or generate 11.08% return on investment over 90 days.

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

Heungkuk Metaltech CoLtd  vs.  RF Materials Co

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.

RF Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RF Materials Co 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 RF Materials

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

The idea behind Heungkuk Metaltech CoLtd and RF Materials 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.