Correlation Between Hyundai Steel and OCI
Can any of the company-specific risk be diversified away by investing in both Hyundai Steel and OCI 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 OCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Steel and OCI Co, you can compare the effects of market volatilities on Hyundai Steel and OCI 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 OCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Steel and OCI.
Diversification Opportunities for Hyundai Steel and OCI
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and OCI is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Steel and OCI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCI Co 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 OCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCI Co has no effect on the direction of Hyundai Steel i.e., Hyundai Steel and OCI go up and down completely randomly.
Pair Corralation between Hyundai Steel and OCI
Assuming the 90 days trading horizon Hyundai Steel is expected to under-perform the OCI. But the stock apears to be less risky and, when comparing its historical volatility, Hyundai Steel is 1.02 times less risky than OCI. The stock trades about -0.34 of its potential returns per unit of risk. The OCI Co is currently generating about -0.27 of returns per unit of risk over similar time horizon. If you would invest 6,900,000 in OCI Co on September 2, 2024 and sell it today you would lose (950,000) from holding OCI Co or give up 13.77% 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. OCI Co
Performance |
| Timeline |
| Hyundai Steel |
| OCI Co |
Hyundai Steel and OCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Steel and OCI
The main advantage of trading using opposite Hyundai Steel and OCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Steel position performs unexpectedly, OCI 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 OCI will offset losses from the drop in OCI's long position.| Hyundai Steel vs. LG Chemicals | Hyundai Steel vs. POSCO Holdings | Hyundai Steel vs. Hanwha Solutions | Hyundai Steel vs. Ecopro 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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