Correlation Between Hyundai and Daewoo Engineering
Can any of the company-specific risk be diversified away by investing in both Hyundai and Daewoo 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 Daewoo 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 Daewoo Engineering Construction, you can compare the effects of market volatilities on Hyundai and Daewoo 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 Daewoo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Daewoo Engineering.
Diversification Opportunities for Hyundai and Daewoo Engineering
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hyundai and Daewoo is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Daewoo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo 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 Daewoo Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo Engineering has no effect on the direction of Hyundai i.e., Hyundai and Daewoo Engineering go up and down completely randomly.
Pair Corralation between Hyundai and Daewoo Engineering
Assuming the 90 days trading horizon Hyundai Motor Co is expected to under-perform the Daewoo Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Hyundai Motor Co is 1.54 times less risky than Daewoo Engineering. The stock trades about -0.1 of its potential returns per unit of risk. The Daewoo Engineering Construction is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 362,000 in Daewoo Engineering Construction on August 26, 2024 and sell it today you would earn a total of 500.00 from holding Daewoo Engineering Construction or generate 0.14% 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. Daewoo Engineering Constructio
Performance |
| Timeline |
| Hyundai Motor |
| Daewoo Engineering |
Hyundai and Daewoo Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Daewoo Engineering
The main advantage of trading using opposite Hyundai and Daewoo Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Daewoo 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 Daewoo Engineering will offset losses from the drop in Daewoo Engineering's long position.| Hyundai vs. Daeduck Electronics Co | Hyundai vs. LG Household Healthcare | Hyundai vs. LG Electronics Pfd | Hyundai vs. Jeju Semiconductor Corp |
| Daewoo Engineering vs. Samsung Electronics Co | Daewoo Engineering vs. Samsung Electronics Co | Daewoo Engineering vs. Hyundai Motor Co | Daewoo Engineering 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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