Correlation Between Hyundai and Silla Sg
Can any of the company-specific risk be diversified away by investing in both Hyundai and Silla Sg 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 Silla Sg 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 Silla Sg Co, you can compare the effects of market volatilities on Hyundai and Silla Sg 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 Silla Sg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Silla Sg.
Diversification Opportunities for Hyundai and Silla Sg
Modest diversification
The 3 months correlation between Hyundai and Silla is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Silla Sg Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silla Sg 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 Silla Sg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silla Sg has no effect on the direction of Hyundai i.e., Hyundai and Silla Sg go up and down completely randomly.
Pair Corralation between Hyundai and Silla Sg
Assuming the 90 days trading horizon Hyundai Motor Co is expected to generate 0.87 times more return on investment than Silla Sg. However, Hyundai Motor Co is 1.15 times less risky than Silla Sg. It trades about 0.09 of its potential returns per unit of risk. Silla Sg Co is currently generating about -0.03 per unit of risk. If you would invest 7,841,625 in Hyundai Motor Co on September 1, 2024 and sell it today you would earn a total of 8,178,375 from holding Hyundai Motor Co or generate 104.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. Silla Sg Co
Performance |
| Timeline |
| Hyundai Motor |
| Silla Sg |
Hyundai and Silla Sg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Silla Sg
The main advantage of trading using opposite Hyundai and Silla Sg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Silla Sg 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 Silla Sg will offset losses from the drop in Silla Sg's long position.| Hyundai vs. Busan Industrial Co | Hyundai vs. Busan Ind | Hyundai vs. Mirae Asset Daewoo | Hyundai vs. Shinhan WTI Futures |
| Silla Sg vs. Korea Real Estate | Silla Sg vs. Korea Ratings Co | Silla Sg vs. IQuest Co | Silla Sg vs. Wonbang Tech 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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