Correlation Between Samhyun Steel and HJ ShipBuilding

Can any of the company-specific risk be diversified away by investing in both Samhyun Steel and HJ ShipBuilding 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 Samhyun Steel and HJ ShipBuilding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samhyun Steel Co and HJ ShipBuilding Construction, you can compare the effects of market volatilities on Samhyun Steel and HJ ShipBuilding 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 Samhyun Steel with a short position of HJ ShipBuilding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samhyun Steel and HJ ShipBuilding.

Diversification Opportunities for Samhyun Steel and HJ ShipBuilding

0.37

Correlation Coefficient

Samhyun Steel  HJ ShipBuilding

Weak diversification

The 3 months correlation between Samhyun and 097230 is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Samhyun Steel Co and HJ ShipBuilding Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HJ ShipBuilding Cons and Samhyun Steel 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 Samhyun Steel Co are associated (or correlated) with HJ ShipBuilding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HJ ShipBuilding Cons has no effect on the direction of Samhyun Steel i.e., Samhyun Steel and HJ ShipBuilding go up and down completely randomly.

Pair Corralation between Samhyun Steel and HJ ShipBuilding

Assuming the 90 days trading horizon Samhyun Steel is expected to generate 24.41 times less return on investment than HJ ShipBuilding. But when comparing it to its historical volatility, Samhyun Steel Co is 5.72 times less risky than HJ ShipBuilding. It trades about 0.06 of its potential returns per unit of risk. HJ ShipBuilding Construction is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  257,500  in HJ ShipBuilding Construction on October 10, 2024 and sell it today you would earn a total of  461,500  from holding HJ ShipBuilding Construction or generate 179.22% return on investment over 90 days.

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

Samhyun Steel Co  vs.  HJ ShipBuilding Construction

Samhyun Steel

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Samhyun Steel Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Samhyun Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

HJ ShipBuilding Cons

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HJ ShipBuilding Construction are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HJ ShipBuilding sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samhyun Steel and HJ ShipBuilding

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

The idea behind Samhyun Steel Co and HJ ShipBuilding Construction 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.