Correlation Between SillaJen and Hwangkum Steel

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

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

Diversification Opportunities for SillaJen and Hwangkum Steel

-0.08

Correlation Coefficient

SillaJen  Hwangkum Steel

Good diversification

The 3 months correlation between SillaJen and Hwangkum is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding SillaJen 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 SillaJen 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 SillaJen 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 SillaJen i.e., SillaJen and Hwangkum Steel go up and down completely randomly.

Pair Corralation between SillaJen and Hwangkum Steel

Assuming the 90 days trading horizon SillaJen is expected to generate 2.56 times more return on investment than Hwangkum Steel. However, SillaJen is 2.56 times more volatile than Hwangkum Steel Technology. It trades about 0.04 of its potential returns per unit of risk. Hwangkum Steel Technology is currently generating about -0.04 per unit of risk. If you would invest  250,500  in SillaJen on October 21, 2024 and sell it today you would earn a total of  13,000  from holding SillaJen or generate 5.19% return on investment over 90 days.

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

SillaJen  vs.  Hwangkum Steel Technology

SillaJen

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SillaJen are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SillaJen may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 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 SillaJen and Hwangkum Steel

The main advantage of trading using opposite SillaJen and Hwangkum Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SillaJen 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 SillaJen 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .