Correlation Between Hyundai Steel and Sempio Foods
Can any of the company-specific risk be diversified away by investing in both Hyundai Steel and Sempio Foods 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 Sempio Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Steel and Sempio Foods Co, you can compare the effects of market volatilities on Hyundai Steel and Sempio Foods 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 Sempio Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Steel and Sempio Foods.
Diversification Opportunities for Hyundai Steel and Sempio Foods
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hyundai and Sempio is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Steel and Sempio Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sempio Foods 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 Sempio Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sempio Foods has no effect on the direction of Hyundai Steel i.e., Hyundai Steel and Sempio Foods go up and down completely randomly.
Pair Corralation between Hyundai Steel and Sempio Foods
Assuming the 90 days trading horizon Hyundai Steel is expected to under-perform the Sempio Foods. But the stock apears to be less risky and, when comparing its historical volatility, Hyundai Steel is 1.44 times less risky than Sempio Foods. The stock trades about -0.02 of its potential returns per unit of risk. The Sempio Foods Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 3,210,000 in Sempio Foods Co on November 2, 2024 and sell it today you would lose (815,000) from holding Sempio Foods Co or give up 25.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Steel vs. Sempio Foods Co
Performance |
| Timeline |
| Hyundai Steel |
| Sempio Foods |
Hyundai Steel and Sempio Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Steel and Sempio Foods
The main advantage of trading using opposite Hyundai Steel and Sempio Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Steel position performs unexpectedly, Sempio Foods 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 Sempio Foods will offset losses from the drop in Sempio Foods' long position.| Hyundai Steel vs. Lotte Fine Chemical | Hyundai Steel vs. Kg Chemical | Hyundai Steel vs. Tae Kyung Chemical | Hyundai Steel vs. Adaptive Plasma Technology |
| Sempio Foods vs. DB Financial Investment | Sempio Foods vs. Innowireless Co | Sempio Foods vs. Industrial Bank | Sempio Foods vs. Shinhan Financial Group |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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