Correlation Between Hyundai and Dongkuk Structures
Can any of the company-specific risk be diversified away by investing in both Hyundai and Dongkuk Structures 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 Dongkuk Structures 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 Dongkuk Structures Construction, you can compare the effects of market volatilities on Hyundai and Dongkuk Structures 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 Dongkuk Structures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Dongkuk Structures.
Diversification Opportunities for Hyundai and Dongkuk Structures
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hyundai and Dongkuk is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Dongkuk Structures Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongkuk Structures 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 Dongkuk Structures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongkuk Structures has no effect on the direction of Hyundai i.e., Hyundai and Dongkuk Structures go up and down completely randomly.
Pair Corralation between Hyundai and Dongkuk Structures
Assuming the 90 days trading horizon Hyundai Motor Co is expected to generate 0.82 times more return on investment than Dongkuk Structures. However, Hyundai Motor Co is 1.23 times less risky than Dongkuk Structures. It trades about 0.1 of its potential returns per unit of risk. Dongkuk Structures Construction is currently generating about -0.03 per unit of risk. If you would invest 9,856,895 in Hyundai Motor Co on September 3, 2024 and sell it today you would earn a total of 5,843,105 from holding Hyundai Motor Co or generate 59.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. Dongkuk Structures Constructio
Performance |
| Timeline |
| Hyundai Motor |
| Dongkuk Structures |
Hyundai and Dongkuk Structures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Dongkuk Structures
The main advantage of trading using opposite Hyundai and Dongkuk Structures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Dongkuk Structures 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 Dongkuk Structures will offset losses from the drop in Dongkuk Structures' long position.| Hyundai vs. NewFlex Technology Co | Hyundai vs. KG Eco Technology | Hyundai vs. Solution Advanced Technology | Hyundai vs. iNtRON Biotechnology |
| Dongkuk Structures vs. LG Display | Dongkuk Structures vs. Hyundai Motor | Dongkuk Structures vs. Hyundai Motor Co | Dongkuk Structures vs. Hyundai Motor Co |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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