Correlation Between Hyundai and CJ ENM
Can any of the company-specific risk be diversified away by investing in both Hyundai and CJ ENM 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 CJ ENM 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 CJ ENM, you can compare the effects of market volatilities on Hyundai and CJ ENM 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 CJ ENM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and CJ ENM.
Diversification Opportunities for Hyundai and CJ ENM
Very weak diversification
The 3 months correlation between Hyundai and 035760 is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and CJ ENM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CJ ENM 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 CJ ENM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CJ ENM has no effect on the direction of Hyundai i.e., Hyundai and CJ ENM go up and down completely randomly.
Pair Corralation between Hyundai and CJ ENM
Assuming the 90 days trading horizon Hyundai Motor Co is expected to under-perform the CJ ENM. But the stock apears to be less risky and, when comparing its historical volatility, Hyundai Motor Co is 1.79 times less risky than CJ ENM. The stock trades about -0.04 of its potential returns per unit of risk. The CJ ENM is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,150,000 in CJ ENM on September 2, 2024 and sell it today you would earn a total of 320,000 from holding CJ ENM or generate 5.2% 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. CJ ENM
Performance |
| Timeline |
| Hyundai Motor |
| CJ ENM |
Hyundai and CJ ENM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and CJ ENM
The main advantage of trading using opposite Hyundai and CJ ENM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, CJ ENM 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 CJ ENM will offset losses from the drop in CJ ENM's long position.| Hyundai vs. Busan Industrial Co | Hyundai vs. Busan Ind | Hyundai vs. Mirae Asset Daewoo | Hyundai vs. Shinhan WTI Futures |
| CJ ENM vs. LG Display | CJ ENM vs. Hyundai Motor Co | CJ ENM vs. Hyundai Motor Co | CJ ENM vs. Adaptive Plasma Technology |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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