Correlation Between Hwangkum Steel and RFTech

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

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

Diversification Opportunities for Hwangkum Steel and RFTech

0.27

Correlation Coefficient

Hwangkum Steel  RFTech

Modest diversification

The 3 months correlation between Hwangkum and RFTech is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Hwangkum Steel Technology and RFTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RFTech and Hwangkum 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 Hwangkum Steel Technology are associated (or correlated) with RFTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RFTech has no effect on the direction of Hwangkum Steel i.e., Hwangkum Steel and RFTech go up and down completely randomly.

Pair Corralation between Hwangkum Steel and RFTech

Assuming the 90 days trading horizon Hwangkum Steel Technology is expected to under-perform the RFTech. But the stock apears to be less risky and, when comparing its historical volatility, Hwangkum Steel Technology is 1.63 times less risky than RFTech. The stock trades about -0.07 of its potential returns per unit of risk. The RFTech Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  322,000  in RFTech Co on September 4, 2024 and sell it today you would earn a total of  45,500  from holding RFTech Co or generate 14.13% return on investment over 90 days.

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

Hwangkum Steel Technology  vs.  RFTech Co

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.

RFTech

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RFTech Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, RFTech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hwangkum Steel and RFTech

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

The idea behind Hwangkum Steel Technology and RFTech 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.