Correlation Between Hyundai and Haesung DS
Can any of the company-specific risk be diversified away by investing in both Hyundai and Haesung DS 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 Haesung DS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Haesung DS Co, you can compare the effects of market volatilities on Hyundai and Haesung DS 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 Haesung DS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Haesung DS.
Diversification Opportunities for Hyundai and Haesung DS
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hyundai and Haesung is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Haesung DS Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haesung DS 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 Haesung DS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haesung DS has no effect on the direction of Hyundai i.e., Hyundai and Haesung DS go up and down completely randomly.
Pair Corralation between Hyundai and Haesung DS
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 0.67 times more return on investment than Haesung DS. However, Hyundai Motor is 1.5 times less risky than Haesung DS. It trades about 0.05 of its potential returns per unit of risk. Haesung DS Co is currently generating about -0.02 per unit of risk. If you would invest 14,028,100 in Hyundai Motor on September 13, 2024 and sell it today you would earn a total of 6,871,900 from holding Hyundai Motor or generate 48.99% 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. Haesung DS Co
Performance |
| Timeline |
| Hyundai Motor |
| Haesung DS |
Hyundai and Haesung DS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Haesung DS
The main advantage of trading using opposite Hyundai and Haesung DS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Haesung DS 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 Haesung DS will offset losses from the drop in Haesung DS's long position.| Hyundai vs. Daou Data Corp | Hyundai vs. Solution Advanced Technology | Hyundai vs. Busan Industrial Co | Hyundai vs. Busan Ind |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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