Correlation Between Hwangkum Steel and Taewoong Logistics

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

Diversification Opportunities for Hwangkum Steel and Taewoong Logistics

0.59

Correlation Coefficient

Hwangkum Steel  Taewoong Logistics

Very weak diversification

The 3 months correlation between Hwangkum and Taewoong is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Hwangkum Steel Technology and Taewoong Logistics CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taewoong Logistics CoLtd 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 Taewoong Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taewoong Logistics CoLtd has no effect on the direction of Hwangkum Steel i.e., Hwangkum Steel and Taewoong Logistics go up and down completely randomly.

Pair Corralation between Hwangkum Steel and Taewoong Logistics

Assuming the 90 days trading horizon Hwangkum Steel Technology is expected to generate 0.6 times more return on investment than Taewoong Logistics. However, Hwangkum Steel Technology is 1.66 times less risky than Taewoong Logistics. It trades about -0.05 of its potential returns per unit of risk. Taewoong Logistics CoLtd is currently generating about -0.05 per unit of risk. If you would invest  503,000  in Hwangkum Steel Technology on September 26, 2024 and sell it today you would lose (11,000) from holding Hwangkum Steel Technology or give up 2.19% of portfolio value over 90 days.

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

Hwangkum Steel Technology  vs.  Taewoong Logistics CoLtd

Hwangkum Steel Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hwangkum Steel Technology 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.

Taewoong Logistics CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taewoong Logistics CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Taewoong Logistics 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 Taewoong Logistics

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

The idea behind Hwangkum Steel Technology and Taewoong Logistics CoLtd 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.