Correlation Between Han Kook and LIG ES

Can any of the company-specific risk be diversified away by investing in both Han Kook and LIG ES 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 Han Kook and LIG ES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Han Kook Steel and LIG ES SPAC, you can compare the effects of market volatilities on Han Kook and LIG ES 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 Han Kook with a short position of LIG ES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Han Kook and LIG ES.

Diversification Opportunities for Han Kook and LIG ES

-0.17

Correlation Coefficient

Han Kook  LIG ES

Good diversification

The 3 months correlation between Han and LIG is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Han Kook Steel and LIG ES SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIG ES SPAC and Han Kook 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 Han Kook Steel are associated (or correlated) with LIG ES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIG ES SPAC has no effect on the direction of Han Kook i.e., Han Kook and LIG ES go up and down completely randomly.

Pair Corralation between Han Kook and LIG ES

Assuming the 90 days trading horizon Han Kook Steel is expected to under-perform the LIG ES. But the stock apears to be less risky and, when comparing its historical volatility, Han Kook Steel is 2.13 times less risky than LIG ES. The stock trades about -0.08 of its potential returns per unit of risk. The LIG ES SPAC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  341,500  in LIG ES SPAC on December 4, 2024 and sell it today you would earn a total of  88,500  from holding LIG ES SPAC or generate 25.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Han Kook Steel  vs.  LIG ES SPAC

Han Kook Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Han Kook Steel 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.

LIG ES SPAC

Risk-Adjusted Performance

OK

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

Pair Trading with Han Kook and LIG ES

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

The idea behind Han Kook Steel and LIG ES SPAC 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.