Correlation Between Stic Investments and Hanil Iron

Can any of the company-specific risk be diversified away by investing in both Stic Investments and Hanil Iron 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 Stic Investments and Hanil Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Stic Investments and Hanil Iron Steel, you can compare the effects of market volatilities on Stic Investments and Hanil Iron 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 Stic Investments with a short position of Hanil Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stic Investments and Hanil Iron.

Diversification Opportunities for Stic Investments and Hanil Iron

-0.15

Correlation Coefficient

Stic Investments  Hanil Iron

Good diversification

The 3 months correlation between Stic and Hanil is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Stic Investments and Hanil Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanil Iron Steel and Stic Investments 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 Stic Investments are associated (or correlated) with Hanil Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanil Iron Steel has no effect on the direction of Stic Investments i.e., Stic Investments and Hanil Iron go up and down completely randomly.

Pair Corralation between Stic Investments and Hanil Iron

Assuming the 90 days trading horizon Stic Investments is expected to generate 1.23 times more return on investment than Hanil Iron. However, Stic Investments is 1.23 times more volatile than Hanil Iron Steel. It trades about 0.05 of its potential returns per unit of risk. Hanil Iron Steel is currently generating about -0.04 per unit of risk. If you would invest  545,106  in Stic Investments on October 5, 2024 and sell it today you would earn a total of  324,894  from holding Stic Investments or generate 59.6% return on investment over 90 days.

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

Stic Investments  vs.  Hanil Iron Steel

Stic Investments

Risk-Adjusted Performance

4 of 100

Insignificant

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

Hanil Iron Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hanil Iron Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hanil Iron is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stic Investments and Hanil Iron

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

The idea behind Stic Investments and Hanil Iron Steel 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.