Correlation Between V One and Hanil Iron

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

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

Diversification Opportunities for V One and Hanil Iron

0.29

Correlation Coefficient

V One  Hanil Iron

Modest diversification

The 3 months correlation between 251630 and Hanil is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding V One Tech Co and Hanil Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanil Iron Steel and V One 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 V One Tech Co are associated (or correlated) with Hanil Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanil Iron Steel has no effect on the direction of V One i.e., V One and Hanil Iron go up and down completely randomly.

Pair Corralation between V One and Hanil Iron

Assuming the 90 days trading horizon V One Tech Co is expected to under-perform the Hanil Iron. In addition to that, V One is 1.78 times more volatile than Hanil Iron Steel. It trades about -0.06 of its total potential returns per unit of risk. Hanil Iron Steel is currently generating about 0.0 per unit of volatility. If you would invest  198,600  in Hanil Iron Steel on September 20, 2024 and sell it today you would lose (1,200) from holding Hanil Iron Steel or give up 0.6% of portfolio value over 90 days.

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

V One Tech Co  vs.  Hanil Iron Steel

V One Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days V One Tech Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Hanil Iron Steel

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with V One and Hanil Iron

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

The idea behind V One Tech Co and Hanil Iron Steel 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.