Correlation Between Hyundai and Kg Chemical
Can any of the company-specific risk be diversified away by investing in both Hyundai and Kg Chemical 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 Kg Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor Co and Kg Chemical, you can compare the effects of market volatilities on Hyundai and Kg Chemical 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 Kg Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Kg Chemical.
Diversification Opportunities for Hyundai and Kg Chemical
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and 001390 is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Kg Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kg Chemical 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 Co are associated (or correlated) with Kg Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kg Chemical has no effect on the direction of Hyundai i.e., Hyundai and Kg Chemical go up and down completely randomly.
Pair Corralation between Hyundai and Kg Chemical
Assuming the 90 days trading horizon Hyundai Motor Co is expected to under-perform the Kg Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Hyundai Motor Co is 1.14 times less risky than Kg Chemical. The stock trades about -0.01 of its potential returns per unit of risk. The Kg Chemical is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 346,735 in Kg Chemical on October 11, 2024 and sell it today you would earn a total of 37,265 from holding Kg Chemical or generate 10.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. Kg Chemical
Performance |
| Timeline |
| Hyundai Motor |
| Kg Chemical |
Hyundai and Kg Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Kg Chemical
The main advantage of trading using opposite Hyundai and Kg Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Kg Chemical 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 Kg Chemical will offset losses from the drop in Kg Chemical's long position.| Hyundai vs. Chorokbaem Healthcare Co | Hyundai vs. SBI Investment KOREA | Hyundai vs. LG Household Healthcare | Hyundai vs. Coloray International Investment |
| Kg Chemical vs. INNOX Advanced Materials | Kg Chemical vs. Sempio Foods Co | Kg Chemical vs. RF Materials Co | Kg Chemical vs. Ssangyong Materials 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |