Correlation Between Hyundai and CHEMTRONICSCOLtd
Can any of the company-specific risk be diversified away by investing in both Hyundai and CHEMTRONICSCOLtd 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 CHEMTRONICSCOLtd 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 CHEMTRONICSCOLtd, you can compare the effects of market volatilities on Hyundai and CHEMTRONICSCOLtd 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 CHEMTRONICSCOLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and CHEMTRONICSCOLtd.
Diversification Opportunities for Hyundai and CHEMTRONICSCOLtd
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hyundai and CHEMTRONICSCOLtd is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and CHEMTRONICSCOLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHEMTRONICSCOLtd 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 CHEMTRONICSCOLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHEMTRONICSCOLtd has no effect on the direction of Hyundai i.e., Hyundai and CHEMTRONICSCOLtd go up and down completely randomly.
Pair Corralation between Hyundai and CHEMTRONICSCOLtd
Assuming the 90 days trading horizon Hyundai is expected to generate 6.1 times less return on investment than CHEMTRONICSCOLtd. But when comparing it to its historical volatility, Hyundai Motor Co is 2.27 times less risky than CHEMTRONICSCOLtd. It trades about 0.2 of its potential returns per unit of risk. CHEMTRONICSCOLtd is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest 1,645,000 in CHEMTRONICSCOLtd on November 4, 2024 and sell it today you would earn a total of 495,000 from holding CHEMTRONICSCOLtd or generate 30.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. CHEMTRONICSCOLtd
Performance |
| Timeline |
| Hyundai Motor |
| CHEMTRONICSCOLtd |
Hyundai and CHEMTRONICSCOLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and CHEMTRONICSCOLtd
The main advantage of trading using opposite Hyundai and CHEMTRONICSCOLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, CHEMTRONICSCOLtd 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 CHEMTRONICSCOLtd will offset losses from the drop in CHEMTRONICSCOLtd's long position.| Hyundai vs. iNtRON Biotechnology | Hyundai vs. Lotte Data Communication | Hyundai vs. Hanil Chemical Ind | Hyundai vs. Namhae Chemical |
| CHEMTRONICSCOLtd vs. DSC Investment | CHEMTRONICSCOLtd vs. Nice Information Telecommunication | CHEMTRONICSCOLtd vs. BGF Retail Co | CHEMTRONICSCOLtd vs. Nh Investment And |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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