Correlation Between Korean Reinsurance and Hyundai Engineering
Can any of the company-specific risk be diversified away by investing in both Korean Reinsurance and Hyundai Engineering 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 Korean Reinsurance and Hyundai Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korean Reinsurance Co and Hyundai Engineering Plastics, you can compare the effects of market volatilities on Korean Reinsurance and Hyundai Engineering 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 Korean Reinsurance with a short position of Hyundai Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Reinsurance and Hyundai Engineering.
Diversification Opportunities for Korean Reinsurance and Hyundai Engineering
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Korean and Hyundai is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Korean Reinsurance Co and Hyundai Engineering Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Engineering and Korean Reinsurance 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 Korean Reinsurance Co are associated (or correlated) with Hyundai Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Engineering has no effect on the direction of Korean Reinsurance i.e., Korean Reinsurance and Hyundai Engineering go up and down completely randomly.
Pair Corralation between Korean Reinsurance and Hyundai Engineering
Assuming the 90 days trading horizon Korean Reinsurance Co is expected to under-perform the Hyundai Engineering. In addition to that, Korean Reinsurance is 1.19 times more volatile than Hyundai Engineering Plastics. It trades about -0.01 of its total potential returns per unit of risk. Hyundai Engineering Plastics is currently generating about 0.16 per unit of volatility. If you would invest 345,500 in Hyundai Engineering Plastics on November 27, 2024 and sell it today you would earn a total of 6,500 from holding Hyundai Engineering Plastics or generate 1.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Reinsurance Co vs. Hyundai Engineering Plastics
Performance |
| Timeline |
| Korean Reinsurance |
| Hyundai Engineering |
Korean Reinsurance and Hyundai Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Reinsurance and Hyundai Engineering
The main advantage of trading using opposite Korean Reinsurance and Hyundai Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Reinsurance position performs unexpectedly, Hyundai Engineering 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 Hyundai Engineering will offset losses from the drop in Hyundai Engineering's long position.| Korean Reinsurance vs. Worldex Industry Trading | Korean Reinsurance vs. E Investment Development | Korean Reinsurance vs. Nh Investment And | Korean Reinsurance vs. SBI Investment KOREA |
| Hyundai Engineering vs. Formetal Co | Hyundai Engineering vs. Homecast CoLtd | Hyundai Engineering vs. Eagon Industrial Co | Hyundai Engineering vs. Haesung Industrial 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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