Correlation Between Hyundai and Daejoo Electronic
Can any of the company-specific risk be diversified away by investing in both Hyundai and Daejoo Electronic 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 Daejoo Electronic 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 Daejoo Electronic Materials, you can compare the effects of market volatilities on Hyundai and Daejoo Electronic 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 Daejoo Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Daejoo Electronic.
Diversification Opportunities for Hyundai and Daejoo Electronic
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hyundai and Daejoo is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Daejoo Electronic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejoo Electronic 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 Daejoo Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejoo Electronic has no effect on the direction of Hyundai i.e., Hyundai and Daejoo Electronic go up and down completely randomly.
Pair Corralation between Hyundai and Daejoo Electronic
Assuming the 90 days trading horizon Hyundai is expected to generate 2.39 times less return on investment than Daejoo Electronic. But when comparing it to its historical volatility, Hyundai Motor Co is 2.14 times less risky than Daejoo Electronic. It trades about 0.03 of its potential returns per unit of risk. Daejoo Electronic Materials is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 9,230,000 in Daejoo Electronic Materials on November 3, 2024 and sell it today you would earn a total of 1,020,000 from holding Daejoo Electronic Materials or generate 11.05% 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. Daejoo Electronic Materials
Performance |
| Timeline |
| Hyundai Motor |
| Daejoo Electronic |
Hyundai and Daejoo Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Daejoo Electronic
The main advantage of trading using opposite Hyundai and Daejoo Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Daejoo Electronic 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 Daejoo Electronic will offset losses from the drop in Daejoo Electronic's long position.| Hyundai vs. Daejung Chemicals Metals | Hyundai vs. Dongbang Transport Logistics | Hyundai vs. SH Energy Chemical | Hyundai vs. Miwon Chemical |
| Daejoo Electronic vs. Samsung Electronics Co | Daejoo Electronic vs. Samsung Electronics Co | Daejoo Electronic vs. Hyundai Motor Co | Daejoo Electronic 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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