Correlation Between Hyundai and Korea New
Can any of the company-specific risk be diversified away by investing in both Hyundai and Korea New 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 Korea New 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 Korea New Network, you can compare the effects of market volatilities on Hyundai and Korea New 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 Korea New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Korea New.
Diversification Opportunities for Hyundai and Korea New
Very good diversification
The 3 months correlation between Hyundai and Korea is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Korea New Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea New Network 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 Korea New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea New Network has no effect on the direction of Hyundai i.e., Hyundai and Korea New go up and down completely randomly.
Pair Corralation between Hyundai and Korea New
Assuming the 90 days trading horizon Hyundai Motor Co is expected to under-perform the Korea New. But the stock apears to be less risky and, when comparing its historical volatility, Hyundai Motor Co is 1.15 times less risky than Korea New. The stock trades about -0.19 of its potential returns per unit of risk. The Korea New Network is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 76,400 in Korea New Network on August 28, 2024 and sell it today you would earn a total of 1,800 from holding Korea New Network or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. Korea New Network
Performance |
| Timeline |
| Hyundai Motor |
| Korea New Network |
Hyundai and Korea New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Korea New
The main advantage of trading using opposite Hyundai and Korea New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Korea New 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 Korea New will offset losses from the drop in Korea New's long position.| Hyundai vs. Kukil Metal Co | Hyundai vs. Daejung Chemicals Metals | Hyundai vs. Nable Communications | Hyundai vs. Daiyang Metal Co |
| Korea New vs. Samsung Electronics Co | Korea New vs. Samsung Electronics Co | Korea New vs. LG Energy Solution | Korea New vs. SK Hynix |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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