Correlation Between Hyundai and LS Electric
Can any of the company-specific risk be diversified away by investing in both Hyundai and LS Electric 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 and LS Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and LS Electric, you can compare the effects of market volatilities on Hyundai and LS Electric 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 with a short position of LS Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and LS Electric.
Diversification Opportunities for Hyundai and LS Electric
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and 010120 is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and LS Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LS Electric and Hyundai 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 Motor are associated (or correlated) with LS Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LS Electric has no effect on the direction of Hyundai i.e., Hyundai and LS Electric go up and down completely randomly.
Pair Corralation between Hyundai and LS Electric
Assuming the 90 days trading horizon Hyundai is expected to generate 2.63 times less return on investment than LS Electric. But when comparing it to its historical volatility, Hyundai Motor is 1.75 times less risky than LS Electric. It trades about 0.05 of its potential returns per unit of risk. LS Electric is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 7,570,000 in LS Electric on August 26, 2024 and sell it today you would earn a total of 5,600,000 from holding LS Electric or generate 73.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. LS Electric
Performance |
| Timeline |
| Hyundai Motor |
| LS Electric |
Hyundai and LS Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and LS Electric
The main advantage of trading using opposite Hyundai and LS Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, LS Electric 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 LS Electric will offset losses from the drop in LS Electric's long position.| Hyundai vs. HB Technology TD | Hyundai vs. Ssangyong Information Communication | Hyundai vs. Dongil Technology | Hyundai vs. ZUM Internet Corp |
| LS Electric vs. Samsung Electronics Co | LS Electric vs. Samsung Electronics Co | LS Electric vs. Hyundai Motor Co | LS Electric vs. Hyundai Motor |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |