Correlation Between Hyundai Steel and Korea Petro
Can any of the company-specific risk be diversified away by investing in both Hyundai Steel and Korea Petro 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 Korea Petro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Steel and Korea Petro Chemical, you can compare the effects of market volatilities on Hyundai Steel and Korea Petro 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 Korea Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Steel and Korea Petro.
Diversification Opportunities for Hyundai Steel and Korea Petro
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hyundai and Korea is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Steel and Korea Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Petro 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 Korea Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Petro Chemical has no effect on the direction of Hyundai Steel i.e., Hyundai Steel and Korea Petro go up and down completely randomly.
Pair Corralation between Hyundai Steel and Korea Petro
Assuming the 90 days trading horizon Hyundai Steel is expected to generate 0.82 times more return on investment than Korea Petro. However, Hyundai Steel is 1.22 times less risky than Korea Petro. It trades about -0.4 of its potential returns per unit of risk. Korea Petro Chemical is currently generating about -0.33 per unit of risk. If you would invest 2,570,000 in Hyundai Steel on August 29, 2024 and sell it today you would lose (430,000) from holding Hyundai Steel or give up 16.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Steel vs. Korea Petro Chemical
Performance |
| Timeline |
| Hyundai Steel |
| Korea Petro Chemical |
Hyundai Steel and Korea Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Steel and Korea Petro
The main advantage of trading using opposite Hyundai Steel and Korea Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Steel position performs unexpectedly, Korea Petro 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 Korea Petro will offset losses from the drop in Korea Petro's long position.| Hyundai Steel vs. LG Chemicals | Hyundai Steel vs. Lotte Chemical Corp | Hyundai Steel vs. Seah Steel Corp |
| Korea Petro vs. LG Chemicals | Korea Petro vs. Lotte Chemical Corp | Korea Petro vs. Hyundai Steel | Korea Petro vs. Seah Steel Corp |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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