Correlation Between Hyundai Steel and Dongjin Semichem
Can any of the company-specific risk be diversified away by investing in both Hyundai Steel and Dongjin Semichem 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 Dongjin Semichem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Steel and Dongjin Semichem Co, you can compare the effects of market volatilities on Hyundai Steel and Dongjin Semichem 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 Dongjin Semichem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Steel and Dongjin Semichem.
Diversification Opportunities for Hyundai Steel and Dongjin Semichem
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hyundai and Dongjin is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Steel and Dongjin Semichem Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongjin Semichem 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 Dongjin Semichem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongjin Semichem has no effect on the direction of Hyundai Steel i.e., Hyundai Steel and Dongjin Semichem go up and down completely randomly.
Pair Corralation between Hyundai Steel and Dongjin Semichem
Assuming the 90 days trading horizon Hyundai Steel is expected to generate 2.12 times less return on investment than Dongjin Semichem. But when comparing it to its historical volatility, Hyundai Steel is 1.12 times less risky than Dongjin Semichem. It trades about 0.08 of its potential returns per unit of risk. Dongjin Semichem Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,155,000 in Dongjin Semichem Co on October 23, 2024 and sell it today you would earn a total of 150,000 from holding Dongjin Semichem Co or generate 6.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Steel vs. Dongjin Semichem Co
Performance |
| Timeline |
| Hyundai Steel |
| Dongjin Semichem |
Hyundai Steel and Dongjin Semichem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Steel and Dongjin Semichem
The main advantage of trading using opposite Hyundai Steel and Dongjin Semichem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Steel position performs unexpectedly, Dongjin Semichem 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 Dongjin Semichem will offset losses from the drop in Dongjin Semichem's long position.| Hyundai Steel vs. Daewon Chemical Co | Hyundai Steel vs. Top Material Co | Hyundai Steel vs. Phoenix Materials Co | Hyundai Steel vs. Union Materials Corp |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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