Correlation Between Hyundai Steel and BYON Co
Can any of the company-specific risk be diversified away by investing in both Hyundai Steel and BYON Co 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 BYON Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Steel and BYON Co, you can compare the effects of market volatilities on Hyundai Steel and BYON Co 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 BYON Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Steel and BYON Co.
Diversification Opportunities for Hyundai Steel and BYON Co
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hyundai and BYON is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Steel and BYON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYON 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 BYON Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYON Co has no effect on the direction of Hyundai Steel i.e., Hyundai Steel and BYON Co go up and down completely randomly.
Pair Corralation between Hyundai Steel and BYON Co
Assuming the 90 days trading horizon Hyundai Steel is expected to generate 0.3 times more return on investment than BYON Co. However, Hyundai Steel is 3.33 times less risky than BYON Co. It trades about 0.24 of its potential returns per unit of risk. BYON Co is currently generating about -0.16 per unit of risk. If you would invest 2,315,000 in Hyundai Steel on December 1, 2024 and sell it today you would earn a total of 350,000 from holding Hyundai Steel or generate 15.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Steel vs. BYON Co
Performance |
| Timeline |
| Hyundai Steel |
| BYON Co |
Hyundai Steel and BYON Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Steel and BYON Co
The main advantage of trading using opposite Hyundai Steel and BYON Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Steel position performs unexpectedly, BYON Co 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 BYON Co will offset losses from the drop in BYON Co's long position.| Hyundai Steel vs. Korea Steel Co | Hyundai Steel vs. Hyundai BNG Steel | Hyundai Steel vs. Hwangkum Steel Technology | Hyundai Steel vs. Hanwha InvestmentSecurities Co |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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