Correlation Between Histeel and Shin Steel

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

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

Diversification Opportunities for Histeel and Shin Steel

-0.21

Correlation Coefficient

Histeel  Shin Steel

Very good diversification

The 3 months correlation between Histeel and Shin is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Histeel and Shin Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Steel and Histeel 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 Histeel are associated (or correlated) with Shin Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Steel has no effect on the direction of Histeel i.e., Histeel and Shin Steel go up and down completely randomly.

Pair Corralation between Histeel and Shin Steel

Assuming the 90 days trading horizon Histeel is expected to generate 4.31 times less return on investment than Shin Steel. In addition to that, Histeel is 1.11 times more volatile than Shin Steel Co. It trades about 0.0 of its total potential returns per unit of risk. Shin Steel Co is currently generating about 0.01 per unit of volatility. If you would invest  239,000  in Shin Steel Co on December 2, 2024 and sell it today you would lose (2,500) from holding Shin Steel Co or give up 1.05% of portfolio value over 90 days.

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

Histeel  vs.  Shin Steel Co

Histeel

Risk-Adjusted Performance

Very Weak

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

Shin Steel

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Histeel and Shin Steel

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

The idea behind Histeel and Shin Steel Co 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.