Correlation Between Hyundai and Sejong Industrial
Can any of the company-specific risk be diversified away by investing in both Hyundai and Sejong Industrial 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 Sejong Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Sejong Industrial, you can compare the effects of market volatilities on Hyundai and Sejong Industrial 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 Sejong Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Sejong Industrial.
Diversification Opportunities for Hyundai and Sejong Industrial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hyundai and Sejong is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Sejong Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sejong Industrial 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 Sejong Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sejong Industrial has no effect on the direction of Hyundai i.e., Hyundai and Sejong Industrial go up and down completely randomly.
Pair Corralation between Hyundai and Sejong Industrial
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.15 times more return on investment than Sejong Industrial. However, Hyundai is 1.15 times more volatile than Sejong Industrial. It trades about 0.04 of its potential returns per unit of risk. Sejong Industrial is currently generating about -0.05 per unit of risk. If you would invest 17,764,700 in Hyundai Motor on September 4, 2024 and sell it today you would earn a total of 3,835,300 from holding Hyundai Motor or generate 21.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. Sejong Industrial
Performance |
| Timeline |
| Hyundai Motor |
| Sejong Industrial |
Hyundai and Sejong Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Sejong Industrial
The main advantage of trading using opposite Hyundai and Sejong Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Sejong Industrial 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 Sejong Industrial will offset losses from the drop in Sejong Industrial's long position.| Hyundai vs. Eagon Industrial Co | Hyundai vs. Digital Power Communications | Hyundai vs. Songwon Industrial Co | Hyundai vs. Ssangyong Information Communication |
| Sejong Industrial vs. KMH Hitech Co | Sejong Industrial vs. Raontech | Sejong Industrial vs. Hwangkum Steel Technology | Sejong Industrial vs. CU Tech Corp |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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