Correlation Between Hyundai and DAEMO Engineering
Can any of the company-specific risk be diversified away by investing in both Hyundai and DAEMO Engineering 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 DAEMO Engineering 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 DAEMO Engineering Co, you can compare the effects of market volatilities on Hyundai and DAEMO Engineering 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 DAEMO Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and DAEMO Engineering.
Diversification Opportunities for Hyundai and DAEMO Engineering
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hyundai and DAEMO is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and DAEMO Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAEMO Engineering 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 DAEMO Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAEMO Engineering has no effect on the direction of Hyundai i.e., Hyundai and DAEMO Engineering go up and down completely randomly.
Pair Corralation between Hyundai and DAEMO Engineering
Assuming the 90 days trading horizon Hyundai Motor Co is expected to generate 0.29 times more return on investment than DAEMO Engineering. However, Hyundai Motor Co is 3.45 times less risky than DAEMO Engineering. It trades about 0.0 of its potential returns per unit of risk. DAEMO Engineering Co is currently generating about -0.01 per unit of risk. If you would invest 15,740,000 in Hyundai Motor Co on September 1, 2024 and sell it today you would lose (40,000) from holding Hyundai Motor Co or give up 0.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hyundai Motor Co vs. DAEMO Engineering Co
Performance |
| Timeline |
| Hyundai Motor |
| DAEMO Engineering |
Hyundai and DAEMO Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and DAEMO Engineering
The main advantage of trading using opposite Hyundai and DAEMO Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, DAEMO Engineering 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 DAEMO Engineering will offset losses from the drop in DAEMO Engineering's long position.| Hyundai vs. INNOX Advanced Materials | Hyundai vs. Top Material Co | Hyundai vs. LS Materials | Hyundai vs. PI Advanced Materials |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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