Correlation Between Hironic and J Steel

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

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

Diversification Opportunities for Hironic and J Steel

-0.33

Correlation Coefficient

Hironic  J Steel

Very good diversification

The 3 months correlation between Hironic and 023440 is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Hironic Co and J Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Steel and Hironic 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 Hironic Co are associated (or correlated) with J Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Steel has no effect on the direction of Hironic i.e., Hironic and J Steel go up and down completely randomly.

Pair Corralation between Hironic and J Steel

Assuming the 90 days trading horizon Hironic Co is expected to generate 0.8 times more return on investment than J Steel. However, Hironic Co is 1.25 times less risky than J Steel. It trades about 0.01 of its potential returns per unit of risk. J Steel Co is currently generating about 0.0 per unit of risk. If you would invest  668,000  in Hironic Co on October 24, 2024 and sell it today you would lose (11,000) from holding Hironic Co or give up 1.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Hironic Co  vs.  J Steel Co

Hironic

Risk-Adjusted Performance

0 of 100

Very Weak

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

J Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days J Steel Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, J 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 Hironic and J Steel

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

The idea behind Hironic Co and J 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.