Correlation Between Hyundai and Wonbang Tech
Can any of the company-specific risk be diversified away by investing in both Hyundai and Wonbang Tech 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 Wonbang Tech 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 Wonbang Tech Co, you can compare the effects of market volatilities on Hyundai and Wonbang Tech 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 Wonbang Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Wonbang Tech.
Diversification Opportunities for Hyundai and Wonbang Tech
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and Wonbang is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Wonbang Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonbang Tech 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 Wonbang Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonbang Tech has no effect on the direction of Hyundai i.e., Hyundai and Wonbang Tech go up and down completely randomly.
Pair Corralation between Hyundai and Wonbang Tech
Assuming the 90 days trading horizon Hyundai Motor Co is expected to generate 0.64 times more return on investment than Wonbang Tech. However, Hyundai Motor Co is 1.55 times less risky than Wonbang Tech. It trades about -0.16 of its potential returns per unit of risk. Wonbang Tech Co is currently generating about -0.21 per unit of risk. If you would invest 17,500,000 in Hyundai Motor Co on August 24, 2024 and sell it today you would lose (1,120,000) from holding Hyundai Motor Co or give up 6.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. Wonbang Tech Co
Performance |
| Timeline |
| Hyundai Motor |
| Wonbang Tech |
Hyundai and Wonbang Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Wonbang Tech
The main advantage of trading using opposite Hyundai and Wonbang Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Wonbang Tech 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 Wonbang Tech will offset losses from the drop in Wonbang Tech's long position.| Hyundai vs. Gyeongnam Steel Co | Hyundai vs. LG Household Healthcare | Hyundai vs. Wonil Special Steel | Hyundai vs. Hanil Iron Steel |
| Wonbang Tech vs. Coloray International Investment | Wonbang Tech vs. Seoul Broadcasting System | Wonbang Tech vs. LB Investment | Wonbang Tech vs. Woori Technology Investment |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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