Correlation Between Wonil Special and Histeel

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

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

Diversification Opportunities for Wonil Special and Histeel

0.75

Correlation Coefficient

Wonil Special  Histeel

Poor diversification

The 3 months correlation between Wonil and Histeel is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Wonil Special Steel and Histeel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Histeel and Wonil Special 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 Wonil Special Steel 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 Wonil Special i.e., Wonil Special and Histeel go up and down completely randomly.

Pair Corralation between Wonil Special and Histeel

Assuming the 90 days trading horizon Wonil Special Steel is expected to generate 0.4 times more return on investment than Histeel. However, Wonil Special Steel is 2.48 times less risky than Histeel. It trades about 0.0 of its potential returns per unit of risk. Histeel is currently generating about -0.03 per unit of risk. If you would invest  717,000  in Wonil Special Steel on September 12, 2024 and sell it today you would lose (4,000) from holding Wonil Special Steel or give up 0.56% of portfolio value over 90 days.

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

Wonil Special Steel  vs.  Histeel

Wonil Special Steel

Risk-Adjusted Performance

0 of 100

Very Weak

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

The main advantage of trading using opposite Wonil Special and Histeel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wonil Special 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 Wonil Special Steel 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.