Correlation Between SK IE and Hwangkum Steel

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

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

Diversification Opportunities for SK IE and Hwangkum Steel

0.69

Correlation Coefficient

SK IE  Hwangkum Steel

Poor diversification

The 3 months correlation between 361610 and Hwangkum is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SK IE Technology 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 SK IE 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 SK IE Technology 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 SK IE i.e., SK IE and Hwangkum Steel go up and down completely randomly.

Pair Corralation between SK IE and Hwangkum Steel

Assuming the 90 days trading horizon SK IE Technology is expected to generate 2.21 times more return on investment than Hwangkum Steel. However, SK IE is 2.21 times more volatile than Hwangkum Steel Technology. It trades about 0.16 of its potential returns per unit of risk. Hwangkum Steel Technology is currently generating about 0.21 per unit of risk. If you would invest  2,300,000  in SK IE Technology on April 25, 2025 and sell it today you would earn a total of  585,000  from holding SK IE Technology or generate 25.43% return on investment over 90 days.

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

SK IE Technology  vs.  Hwangkum Steel Technology

SK IE Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SK IE Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SK IE sustained solid returns over the last few months and may actually be approaching a breakup point.

Hwangkum Steel Technology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hwangkum Steel Technology are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hwangkum Steel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SK IE and Hwangkum Steel

The main advantage of trading using opposite SK IE and Hwangkum Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK IE 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 SK IE Technology 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.