Correlation Between Hwangkum Steel and Seoul Electronics
Can any of the company-specific risk be diversified away by investing in both Hwangkum Steel and Seoul Electronics 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 Hwangkum Steel and Seoul Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hwangkum Steel Technology and Seoul Electronics Telecom, you can compare the effects of market volatilities on Hwangkum Steel and Seoul Electronics 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 Hwangkum Steel with a short position of Seoul Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwangkum Steel and Seoul Electronics.
Diversification Opportunities for Hwangkum Steel and Seoul Electronics
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hwangkum and Seoul is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Hwangkum Steel Technology and Seoul Electronics Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Electronics Telecom and Hwangkum 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 Hwangkum Steel Technology are associated (or correlated) with Seoul Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Electronics Telecom has no effect on the direction of Hwangkum Steel i.e., Hwangkum Steel and Seoul Electronics go up and down completely randomly.
Pair Corralation between Hwangkum Steel and Seoul Electronics
Assuming the 90 days trading horizon Hwangkum Steel Technology is expected to generate 0.38 times more return on investment than Seoul Electronics. However, Hwangkum Steel Technology is 2.62 times less risky than Seoul Electronics. It trades about -0.12 of its potential returns per unit of risk. Seoul Electronics Telecom is currently generating about -0.06 per unit of risk. If you would invest 712,000 in Hwangkum Steel Technology on September 25, 2024 and sell it today you would lose (224,500) from holding Hwangkum Steel Technology or give up 31.53% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Hwangkum Steel Technology vs. Seoul Electronics Telecom
Performance |
Timeline |
Hwangkum Steel Technology |
Seoul Electronics Telecom |
Hwangkum Steel and Seoul Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hwangkum Steel and Seoul Electronics
The main advantage of trading using opposite Hwangkum Steel and Seoul Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hwangkum Steel position performs unexpectedly, Seoul Electronics 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 Seoul Electronics will offset losses from the drop in Seoul Electronics' long position.Hwangkum Steel vs. AptaBio Therapeutics | Hwangkum Steel vs. Wonbang Tech Co | Hwangkum Steel vs. Busan Industrial Co | Hwangkum Steel vs. Busan Ind |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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