Correlation Between Hwangkum Steel and Mobile Appliance

Can any of the company-specific risk be diversified away by investing in both Hwangkum Steel and Mobile Appliance 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 Mobile Appliance 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 Mobile Appliance, you can compare the effects of market volatilities on Hwangkum Steel and Mobile Appliance 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 Mobile Appliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwangkum Steel and Mobile Appliance.

Diversification Opportunities for Hwangkum Steel and Mobile Appliance

0.7

Correlation Coefficient

Hwangkum Steel  Mobile Appliance

Poor diversification

The 3 months correlation between Hwangkum and Mobile is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hwangkum Steel Technology and Mobile Appliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobile Appliance 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 Mobile Appliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobile Appliance has no effect on the direction of Hwangkum Steel i.e., Hwangkum Steel and Mobile Appliance go up and down completely randomly.

Pair Corralation between Hwangkum Steel and Mobile Appliance

Assuming the 90 days trading horizon Hwangkum Steel Technology is expected to generate 0.45 times more return on investment than Mobile Appliance. However, Hwangkum Steel Technology is 2.22 times less risky than Mobile Appliance. It trades about 0.04 of its potential returns per unit of risk. Mobile Appliance is currently generating about 0.02 per unit of risk. If you would invest  500,220  in Hwangkum Steel Technology on November 29, 2024 and sell it today you would earn a total of  10,780  from holding Hwangkum Steel Technology or generate 2.16% return on investment over 90 days.

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

Hwangkum Steel Technology  vs.  Mobile Appliance

Hwangkum Steel Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hwangkum Steel Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hwangkum Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mobile Appliance

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mobile Appliance are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Mobile Appliance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hwangkum Steel and Mobile Appliance

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

The idea behind Hwangkum Steel Technology and Mobile Appliance 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.