Correlation Between Hankook Steel and IC Technology
Can any of the company-specific risk be diversified away by investing in both Hankook Steel and IC Technology 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 Hankook Steel and IC Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hankook Steel Co and IC Technology Co, you can compare the effects of market volatilities on Hankook Steel and IC Technology 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 Hankook Steel with a short position of IC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hankook Steel and IC Technology.
Diversification Opportunities for Hankook Steel and IC Technology
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hankook and 052860 is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hankook Steel Co and IC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IC Technology and Hankook 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 Hankook Steel Co are associated (or correlated) with IC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IC Technology has no effect on the direction of Hankook Steel i.e., Hankook Steel and IC Technology go up and down completely randomly.
Pair Corralation between Hankook Steel and IC Technology
Assuming the 90 days trading horizon Hankook Steel is expected to generate 3.15 times less return on investment than IC Technology. But when comparing it to its historical volatility, Hankook Steel Co is 1.11 times less risky than IC Technology. It trades about 0.02 of its potential returns per unit of risk. IC Technology Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 170,000 in IC Technology Co on October 9, 2024 and sell it today you would earn a total of 11,800 from holding IC Technology Co or generate 6.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Hankook Steel Co vs. IC Technology Co
Performance |
Timeline |
Hankook Steel |
IC Technology |
Hankook Steel and IC Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hankook Steel and IC Technology
The main advantage of trading using opposite Hankook Steel and IC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hankook Steel position performs unexpectedly, IC Technology 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 IC Technology will offset losses from the drop in IC Technology's long position.Hankook Steel vs. Lotte Data Communication | Hankook Steel vs. PLAYWITH | Hankook Steel vs. Hankukpackage Co | Hankook Steel vs. Samick Musical Instruments |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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