Correlation Between Shin Steel and Histeel

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

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

Diversification Opportunities for Shin Steel and Histeel

0.89

Correlation Coefficient

Shin Steel  Histeel

Very poor diversification

The 3 months correlation between Shin and Histeel is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Shin Steel Co and Histeel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Histeel and Shin 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 Shin Steel Co are associated (or correlated) with Histeel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Histeel has no effect on the direction of Shin Steel i.e., Shin Steel and Histeel go up and down completely randomly.

Pair Corralation between Shin Steel and Histeel

Assuming the 90 days trading horizon Shin Steel Co is expected to generate 0.65 times more return on investment than Histeel. However, Shin Steel Co is 1.55 times less risky than Histeel. It trades about -0.03 of its potential returns per unit of risk. Histeel is currently generating about -0.03 per unit of risk. If you would invest  248,500  in Shin Steel Co on September 4, 2024 and sell it today you would lose (5,500) from holding Shin Steel Co or give up 2.21% of portfolio value over 90 days.

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

Shin Steel Co  vs.  Histeel

Shin Steel

Risk-Adjusted Performance

0 of 100

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.

Histeel

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Shin Steel and Histeel

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

The idea behind Shin Steel Co and Histeel 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.

Check out your portfolio center.

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 CEOs Directory module to screen CEOs from public companies around the world.