Correlation Between Seoul Food and Hyundai Engineering
Can any of the company-specific risk be diversified away by investing in both Seoul Food and Hyundai Engineering 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 Seoul Food and Hyundai Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoul Food Industrial and Hyundai Engineering Construction, you can compare the effects of market volatilities on Seoul Food and Hyundai Engineering 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 Seoul Food with a short position of Hyundai Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and Hyundai Engineering.
Diversification Opportunities for Seoul Food and Hyundai Engineering
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Seoul and Hyundai is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial and Hyundai Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Engineering and Seoul Food 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 Seoul Food Industrial are associated (or correlated) with Hyundai Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Engineering has no effect on the direction of Seoul Food i.e., Seoul Food and Hyundai Engineering go up and down completely randomly.
Pair Corralation between Seoul Food and Hyundai Engineering
Assuming the 90 days trading horizon Seoul Food Industrial is expected to under-perform the Hyundai Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Seoul Food Industrial is 1.31 times less risky than Hyundai Engineering. The stock trades about -0.04 of its potential returns per unit of risk. The Hyundai Engineering Construction is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 3,507,185 in Hyundai Engineering Construction on September 26, 2024 and sell it today you would lose (907,185) from holding Hyundai Engineering Construction or give up 25.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Food Industrial vs. Hyundai Engineering Constructi
Performance |
| Timeline |
| Seoul Food Industrial |
| Hyundai Engineering |
Seoul Food and Hyundai Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Food and Hyundai Engineering
The main advantage of trading using opposite Seoul Food and Hyundai Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Food position performs unexpectedly, Hyundai Engineering 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 Engineering will offset losses from the drop in Hyundai Engineering's long position.| Seoul Food vs. Samsung Publishing Co | Seoul Food vs. Samlip General Foods | Seoul Food vs. LS Materials | Seoul Food vs. Asiana Airlines |
| Hyundai Engineering vs. PlayD Co | Hyundai Engineering vs. Ssangyong Information Communication | Hyundai Engineering vs. Korea Alcohol Industrial | Hyundai Engineering vs. Samick Musical Instruments |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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