Correlation Between Kukil Metal and Hanyang ENG

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

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

Diversification Opportunities for Kukil Metal and Hanyang ENG

0.62

Correlation Coefficient

Kukil Metal  Hanyang ENG

Poor diversification

The 3 months correlation between Kukil and Hanyang is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Kukil Metal Co and Hanyang ENG Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanyang ENG and Kukil Metal 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 Kukil Metal Co are associated (or correlated) with Hanyang ENG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanyang ENG has no effect on the direction of Kukil Metal i.e., Kukil Metal and Hanyang ENG go up and down completely randomly.

Pair Corralation between Kukil Metal and Hanyang ENG

Assuming the 90 days trading horizon Kukil Metal Co is expected to under-perform the Hanyang ENG. But the stock apears to be less risky and, when comparing its historical volatility, Kukil Metal Co is 1.23 times less risky than Hanyang ENG. The stock trades about -0.23 of its potential returns per unit of risk. The Hanyang ENG Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,721,000  in Hanyang ENG Co on September 4, 2024 and sell it today you would lose (106,000) from holding Hanyang ENG Co or give up 6.16% of portfolio value over 90 days.

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

Kukil Metal Co  vs.  Hanyang ENG Co

Kukil Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kukil Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hanyang ENG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Kukil Metal and Hanyang ENG

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

The idea behind Kukil Metal Co and Hanyang ENG 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.