Correlation Between Hyundai Steel and Korea Alcohol
Can any of the company-specific risk be diversified away by investing in both Hyundai Steel and Korea Alcohol 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 Alcohol 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 Alcohol Industrial, you can compare the effects of market volatilities on Hyundai Steel and Korea Alcohol 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 Alcohol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Steel and Korea Alcohol.
Diversification Opportunities for Hyundai Steel and Korea Alcohol
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and Korea is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Steel and Korea Alcohol Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Alcohol Industrial 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 Alcohol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Alcohol Industrial has no effect on the direction of Hyundai Steel i.e., Hyundai Steel and Korea Alcohol go up and down completely randomly.
Pair Corralation between Hyundai Steel and Korea Alcohol
Assuming the 90 days trading horizon Hyundai Steel is expected to generate 3.61 times less return on investment than Korea Alcohol. In addition to that, Hyundai Steel is 2.75 times more volatile than Korea Alcohol Industrial. It trades about 0.05 of its total potential returns per unit of risk. Korea Alcohol Industrial is currently generating about 0.52 per unit of volatility. If you would invest 791,146 in Korea Alcohol Industrial on October 21, 2024 and sell it today you would earn a total of 70,854 from holding Korea Alcohol Industrial or generate 8.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Steel vs. Korea Alcohol Industrial
Performance |
| Timeline |
| Hyundai Steel |
| Korea Alcohol Industrial |
Hyundai Steel and Korea Alcohol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Steel and Korea Alcohol
The main advantage of trading using opposite Hyundai Steel and Korea Alcohol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Steel position performs unexpectedly, Korea Alcohol 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 Alcohol will offset losses from the drop in Korea Alcohol's long position.| Hyundai Steel vs. Sempio Foods Co | Hyundai Steel vs. LG Household Healthcare | Hyundai Steel vs. Daewon Chemical Co | Hyundai Steel vs. Phoenix Materials Co |
| Korea Alcohol vs. Dongbang Transport Logistics | Korea Alcohol vs. Hanjoo Light Metal | Korea Alcohol vs. INFINITT Healthcare Co | Korea Alcohol vs. Aprogen Healthcare Games |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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