Correlation Between Hyundai and Dongwon Ind
Can any of the company-specific risk be diversified away by investing in both Hyundai and Dongwon Ind 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 Dongwon Ind 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 Dongwon Ind, you can compare the effects of market volatilities on Hyundai and Dongwon Ind 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 Dongwon Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Dongwon Ind.
Diversification Opportunities for Hyundai and Dongwon Ind
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hyundai and Dongwon is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Dongwon Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwon Ind 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 Dongwon Ind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwon Ind has no effect on the direction of Hyundai i.e., Hyundai and Dongwon Ind go up and down completely randomly.
Pair Corralation between Hyundai and Dongwon Ind
Assuming the 90 days trading horizon Hyundai Motor Co is expected to generate 0.91 times more return on investment than Dongwon Ind. However, Hyundai Motor Co is 1.1 times less risky than Dongwon Ind. It trades about 0.16 of its potential returns per unit of risk. Dongwon Ind is currently generating about -0.05 per unit of risk. If you would invest 15,670,000 in Hyundai Motor Co on October 17, 2024 and sell it today you would earn a total of 680,000 from holding Hyundai Motor Co or generate 4.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. Dongwon Ind
Performance |
| Timeline |
| Hyundai Motor |
| Dongwon Ind |
Hyundai and Dongwon Ind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Dongwon Ind
The main advantage of trading using opposite Hyundai and Dongwon Ind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Dongwon Ind 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 Dongwon Ind will offset losses from the drop in Dongwon Ind's long position.| Hyundai vs. Shinil Industrial Co | Hyundai vs. NICE Information Service | Hyundai vs. Namhwa Industrial Co | Hyundai vs. Nice Information Telecommunication |
| Dongwon Ind vs. Sewoon Medical Co | Dongwon Ind vs. Wireless Power Amplifier | Dongwon Ind vs. LG Display Co | Dongwon Ind vs. Asiana Airlines |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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