Correlation Between Hyundai and Hanyang ENG
Can any of the company-specific risk be diversified away by investing in both Hyundai and Hanyang ENG 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 Hanyang ENG 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 Hanyang ENG Co, you can compare the effects of market volatilities on Hyundai and Hanyang ENG 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 Hanyang ENG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Hanyang ENG.
Diversification Opportunities for Hyundai and Hanyang ENG
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hyundai and Hanyang is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Hanyang ENG Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanyang ENG 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 Hanyang ENG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanyang ENG has no effect on the direction of Hyundai i.e., Hyundai and Hanyang ENG go up and down completely randomly.
Pair Corralation between Hyundai and Hanyang ENG
Assuming the 90 days trading horizon Hyundai Motor Co is expected to under-perform the Hanyang ENG. In addition to that, Hyundai is 1.08 times more volatile than Hanyang ENG Co. It trades about -0.08 of its total potential returns per unit of risk. Hanyang ENG Co is currently generating about -0.02 per unit of volatility. If you would invest 1,712,000 in Hanyang ENG Co on August 27, 2024 and sell it today you would lose (12,000) from holding Hanyang ENG Co or give up 0.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. Hanyang ENG Co
Performance |
| Timeline |
| Hyundai Motor |
| Hanyang ENG |
Hyundai and Hanyang ENG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Hanyang ENG
The main advantage of trading using opposite Hyundai and Hanyang ENG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Hanyang ENG 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 Hanyang ENG will offset losses from the drop in Hanyang ENG's long position.| Hyundai vs. Busan Industrial Co | Hyundai vs. Busan Ind | Hyundai vs. Mirae Asset Daewoo | Hyundai vs. Shinhan WTI Futures |
| Hanyang ENG vs. Samsung Electronics Co | Hanyang ENG vs. Samsung Electronics Co | Hanyang ENG vs. Hyundai Motor Co | Hanyang ENG vs. Hyundai Motor |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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