Correlation Between Hyundai Engineering and Industrial Bank
Can any of the company-specific risk be diversified away by investing in both Hyundai Engineering and Industrial Bank 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 Hyundai Engineering and Industrial Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Engineering Construction and Industrial Bank, you can compare the effects of market volatilities on Hyundai Engineering and Industrial Bank 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 Hyundai Engineering with a short position of Industrial Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Engineering and Industrial Bank.
Diversification Opportunities for Hyundai Engineering and Industrial Bank
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hyundai and Industrial is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Engineering Constructi and Industrial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank and Hyundai Engineering 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 Hyundai Engineering Construction are associated (or correlated) with Industrial Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Bank has no effect on the direction of Hyundai Engineering i.e., Hyundai Engineering and Industrial Bank go up and down completely randomly.
Pair Corralation between Hyundai Engineering and Industrial Bank
Assuming the 90 days trading horizon Hyundai Engineering Construction is expected to generate 4.28 times more return on investment than Industrial Bank. However, Hyundai Engineering is 4.28 times more volatile than Industrial Bank. It trades about 0.19 of its potential returns per unit of risk. Industrial Bank is currently generating about 0.19 per unit of risk. If you would invest 2,600,000 in Hyundai Engineering Construction on October 25, 2024 and sell it today you would earn a total of 245,000 from holding Hyundai Engineering Construction or generate 9.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Hyundai Engineering Constructi vs. Industrial Bank
Performance |
| Timeline |
| Hyundai Engineering |
| Industrial Bank |
Hyundai Engineering and Industrial Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Engineering and Industrial Bank
The main advantage of trading using opposite Hyundai Engineering and Industrial Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Engineering position performs unexpectedly, Industrial Bank 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 Industrial Bank will offset losses from the drop in Industrial Bank's long position.| Hyundai Engineering vs. Samsung Electronics Co | Hyundai Engineering vs. Samsung Electronics Co | Hyundai Engineering vs. KB Financial Group | Hyundai Engineering vs. Shinhan Financial Group |
| Industrial Bank vs. Samsung Electronics Co | Industrial Bank vs. Samsung Electronics Co | Industrial Bank vs. SK Hynix | Industrial Bank vs. HMM Co |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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