Correlation Between Hyundai and Korea Electric
Can any of the company-specific risk be diversified away by investing in both Hyundai and Korea 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 Korea 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 Korea Electric Power, you can compare the effects of market volatilities on Hyundai and Korea 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 Korea Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Korea Electric.
Diversification Opportunities for Hyundai and Korea Electric
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hyundai and Korea is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Korea Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Electric Power 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 Korea Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Electric Power has no effect on the direction of Hyundai i.e., Hyundai and Korea Electric go up and down completely randomly.
Pair Corralation between Hyundai and Korea Electric
Assuming the 90 days trading horizon Hyundai Motor is expected to under-perform the Korea Electric. In addition to that, Hyundai is 1.15 times more volatile than Korea Electric Power. It trades about -0.06 of its total potential returns per unit of risk. Korea Electric Power is currently generating about 0.11 per unit of volatility. If you would invest 2,280,000 in Korea Electric Power on August 28, 2024 and sell it today you would earn a total of 95,000 from holding Korea Electric Power or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. Korea Electric Power
Performance |
| Timeline |
| Hyundai Motor |
| Korea Electric Power |
Hyundai and Korea Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Korea Electric
The main advantage of trading using opposite Hyundai and Korea Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Korea 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 Korea Electric will offset losses from the drop in Korea Electric's long position.| Hyundai vs. Intellian Technologies | Hyundai vs. Vitzro Tech Co | Hyundai vs. Lion Chemtech Co | Hyundai vs. JYP Entertainment Corp |
| Korea Electric vs. Sungwoo Electronics Co | Korea Electric vs. Cuckoo Electronics Co | Korea Electric vs. INNOX Advanced Materials | Korea Electric vs. Top Material 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |