Correlation Between Hyundai BNG and Namhae Chemical
Can any of the company-specific risk be diversified away by investing in both Hyundai BNG and Namhae Chemical 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 BNG and Namhae Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai BNG Steel and Namhae Chemical, you can compare the effects of market volatilities on Hyundai BNG and Namhae Chemical 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 BNG with a short position of Namhae Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai BNG and Namhae Chemical.
Diversification Opportunities for Hyundai BNG and Namhae Chemical
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and Namhae is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai BNG Steel and Namhae Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhae Chemical and Hyundai BNG 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 BNG Steel are associated (or correlated) with Namhae Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhae Chemical has no effect on the direction of Hyundai BNG i.e., Hyundai BNG and Namhae Chemical go up and down completely randomly.
Pair Corralation between Hyundai BNG and Namhae Chemical
Assuming the 90 days trading horizon Hyundai BNG Steel is expected to generate 2.03 times more return on investment than Namhae Chemical. However, Hyundai BNG is 2.03 times more volatile than Namhae Chemical. It trades about 0.45 of its potential returns per unit of risk. Namhae Chemical is currently generating about 0.02 per unit of risk. If you would invest 1,129,000 in Hyundai BNG Steel on October 21, 2024 and sell it today you would earn a total of 170,000 from holding Hyundai BNG Steel or generate 15.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai BNG Steel vs. Namhae Chemical
Performance |
| Timeline |
| Hyundai BNG Steel |
| Namhae Chemical |
Hyundai BNG and Namhae Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai BNG and Namhae Chemical
The main advantage of trading using opposite Hyundai BNG and Namhae Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai BNG position performs unexpectedly, Namhae Chemical 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 Namhae Chemical will offset losses from the drop in Namhae Chemical's long position.| Hyundai BNG vs. Daejoo Electronic Materials | Hyundai BNG vs. EV Advanced Material | Hyundai BNG vs. LAKE MATERIALS LTD | Hyundai BNG vs. Hyundai Engineering Plastics |
| Namhae Chemical vs. Industrial Bank | Namhae Chemical vs. Songwon Industrial Co | Namhae Chemical vs. Polaris Office Corp | Namhae Chemical vs. Hanjin Transportation 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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