Correlation Between Hyundai and Daebo Magnetic
Can any of the company-specific risk be diversified away by investing in both Hyundai and Daebo Magnetic 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 Daebo Magnetic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Daebo Magnetic CoLtd, you can compare the effects of market volatilities on Hyundai and Daebo Magnetic 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 Daebo Magnetic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Daebo Magnetic.
Diversification Opportunities for Hyundai and Daebo Magnetic
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and Daebo is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Daebo Magnetic CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daebo Magnetic CoLtd 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 Daebo Magnetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daebo Magnetic CoLtd has no effect on the direction of Hyundai i.e., Hyundai and Daebo Magnetic go up and down completely randomly.
Pair Corralation between Hyundai and Daebo Magnetic
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 0.6 times more return on investment than Daebo Magnetic. However, Hyundai Motor is 1.67 times less risky than Daebo Magnetic. It trades about 0.05 of its potential returns per unit of risk. Daebo Magnetic CoLtd is currently generating about -0.09 per unit of risk. If you would invest 14,608,900 in Hyundai Motor on September 2, 2024 and sell it today you would earn a total of 7,241,100 from holding Hyundai Motor or generate 49.57% 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. Daebo Magnetic CoLtd
Performance |
| Timeline |
| Hyundai Motor |
| Daebo Magnetic CoLtd |
Hyundai and Daebo Magnetic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Daebo Magnetic
The main advantage of trading using opposite Hyundai and Daebo Magnetic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Daebo Magnetic 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 Daebo Magnetic will offset losses from the drop in Daebo Magnetic's long position.| Hyundai vs. Semyung Electric Machinery | Hyundai vs. Kaonmedia Co | Hyundai vs. YG Entertainment | Hyundai vs. SM Entertainment Co |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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