Correlation Between Hyundai Steel and Lotte Fine
Can any of the company-specific risk be diversified away by investing in both Hyundai Steel and Lotte Fine 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 Steel and Lotte Fine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Steel and Lotte Fine Chemical, you can compare the effects of market volatilities on Hyundai Steel and Lotte Fine 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 Steel with a short position of Lotte Fine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Steel and Lotte Fine.
Diversification Opportunities for Hyundai Steel and Lotte Fine
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and Lotte is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Steel and Lotte Fine Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Fine Chemical and Hyundai 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 Hyundai Steel are associated (or correlated) with Lotte Fine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Fine Chemical has no effect on the direction of Hyundai Steel i.e., Hyundai Steel and Lotte Fine go up and down completely randomly.
Pair Corralation between Hyundai Steel and Lotte Fine
Assuming the 90 days trading horizon Hyundai Steel is expected to under-perform the Lotte Fine. But the stock apears to be less risky and, when comparing its historical volatility, Hyundai Steel is 1.01 times less risky than Lotte Fine. The stock trades about -0.08 of its potential returns per unit of risk. The Lotte Fine Chemical is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 5,750,000 in Lotte Fine Chemical on August 25, 2024 and sell it today you would lose (2,085,000) from holding Lotte Fine Chemical or give up 36.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Steel vs. Lotte Fine Chemical
Performance |
| Timeline |
| Hyundai Steel |
| Lotte Fine Chemical |
Hyundai Steel and Lotte Fine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Steel and Lotte Fine
The main advantage of trading using opposite Hyundai Steel and Lotte Fine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Steel position performs unexpectedly, Lotte Fine 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 Lotte Fine will offset losses from the drop in Lotte Fine's long position.| Hyundai Steel vs. LG Chemicals | Hyundai Steel vs. POSCO Holdings | Hyundai Steel vs. Lotte Chemical Corp | Hyundai Steel vs. Dongkuk Steel Mill |
| Lotte Fine vs. LG Chemicals | Lotte Fine vs. POSCO Holdings | Lotte Fine vs. Lotte Chemical Corp | Lotte Fine vs. Hyundai Steel |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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