Correlation Between Koh Young and Hwangkum Steel

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

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

Diversification Opportunities for Koh Young and Hwangkum Steel

0.42

Correlation Coefficient

Koh Young  Hwangkum Steel

Very weak diversification

The 3 months correlation between Koh and Hwangkum is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Koh Young Technology and Hwangkum Steel Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwangkum Steel Technology and Koh Young 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 Koh Young Technology are associated (or correlated) with Hwangkum Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwangkum Steel Technology has no effect on the direction of Koh Young i.e., Koh Young and Hwangkum Steel go up and down completely randomly.

Pair Corralation between Koh Young and Hwangkum Steel

Assuming the 90 days trading horizon Koh Young Technology is expected to generate 6.66 times more return on investment than Hwangkum Steel. However, Koh Young is 6.66 times more volatile than Hwangkum Steel Technology. It trades about 0.19 of its potential returns per unit of risk. Hwangkum Steel Technology is currently generating about 0.07 per unit of risk. If you would invest  803,071  in Koh Young Technology on December 29, 2024 and sell it today you would earn a total of  596,929  from holding Koh Young Technology or generate 74.33% return on investment over 90 days.

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

Koh Young Technology  vs.  Hwangkum Steel Technology

Koh Young Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Koh Young Technology are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Koh Young sustained solid returns over the last few months and may actually be approaching a breakup point.

Hwangkum Steel Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hwangkum Steel Technology are ranked lower than 5 (%) 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.

Pair Trading with Koh Young and Hwangkum Steel

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

The idea behind Koh Young Technology and Hwangkum Steel Technology 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.