Correlation Between Hyundai and Han Kook
Can any of the company-specific risk be diversified away by investing in both Hyundai and Han Kook 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 Han Kook into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Han Kook Capital, you can compare the effects of market volatilities on Hyundai and Han Kook 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 Han Kook. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Han Kook.
Diversification Opportunities for Hyundai and Han Kook
Very poor diversification
The 3 months correlation between Hyundai and Han is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Han Kook Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Han Kook Capital 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 Han Kook. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Han Kook Capital has no effect on the direction of Hyundai i.e., Hyundai and Han Kook go up and down completely randomly.
Pair Corralation between Hyundai and Han Kook
Assuming the 90 days trading horizon Hyundai Motor is expected to under-perform the Han Kook. In addition to that, Hyundai is 3.73 times more volatile than Han Kook Capital. It trades about -0.11 of its total potential returns per unit of risk. Han Kook Capital is currently generating about -0.11 per unit of volatility. If you would invest 58,200 in Han Kook Capital on August 28, 2024 and sell it today you would lose (2,200) from holding Han Kook Capital or give up 3.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. Han Kook Capital
Performance |
| Timeline |
| Hyundai Motor |
| Han Kook Capital |
Hyundai and Han Kook Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Han Kook
The main advantage of trading using opposite Hyundai and Han Kook positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Han Kook 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 Han Kook will offset losses from the drop in Han Kook's long position.| Hyundai vs. Intellian Technologies | Hyundai vs. Vitzro Tech Co | Hyundai vs. Lion Chemtech Co | Hyundai vs. JYP Entertainment Corp |
| Han Kook vs. Korea New Network | Han Kook vs. Dong A Eltek | Han Kook vs. Dreamus Company | Han Kook vs. SK Bioscience 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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