Correlation Between Dongbang Transport and Hyundai Heavy
Can any of the company-specific risk be diversified away by investing in both Dongbang Transport and Hyundai Heavy 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 Dongbang Transport and Hyundai Heavy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongbang Transport Logistics and Hyundai Heavy Industries, you can compare the effects of market volatilities on Dongbang Transport and Hyundai Heavy 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 Dongbang Transport with a short position of Hyundai Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Transport and Hyundai Heavy.
Diversification Opportunities for Dongbang Transport and Hyundai Heavy
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dongbang and Hyundai is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and Hyundai Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Heavy Industries and Dongbang Transport 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 Dongbang Transport Logistics are associated (or correlated) with Hyundai Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Heavy Industries has no effect on the direction of Dongbang Transport i.e., Dongbang Transport and Hyundai Heavy go up and down completely randomly.
Pair Corralation between Dongbang Transport and Hyundai Heavy
Assuming the 90 days trading horizon Dongbang Transport Logistics is expected to under-perform the Hyundai Heavy. In addition to that, Dongbang Transport is 1.41 times more volatile than Hyundai Heavy Industries. It trades about -0.04 of its total potential returns per unit of risk. Hyundai Heavy Industries is currently generating about 0.09 per unit of volatility. If you would invest 7,950,000 in Hyundai Heavy Industries on October 28, 2024 and sell it today you would earn a total of 490,000 from holding Hyundai Heavy Industries or generate 6.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbang Transport Logistics vs. Hyundai Heavy Industries
Performance |
| Timeline |
| Dongbang Transport |
| Hyundai Heavy Industries |
Dongbang Transport and Hyundai Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Transport and Hyundai Heavy
The main advantage of trading using opposite Dongbang Transport and Hyundai Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Transport position performs unexpectedly, Hyundai Heavy 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 Hyundai Heavy will offset losses from the drop in Hyundai Heavy's long position.| Dongbang Transport vs. Lotte Data Communication | Dongbang Transport vs. NICE Information Service | Dongbang Transport vs. Lotte Non Life Insurance | Dongbang Transport vs. SH Energy Chemical |
| Hyundai Heavy vs. PI Advanced Materials | Hyundai Heavy vs. Digital Power Communications | Hyundai Heavy vs. Hankook Furniture Co | Hyundai Heavy vs. ECSTELECOM 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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